... which would cut off imports in a non-self-sufficient state (Pakistan is a country that if it ever were isolated internationally, the people would just start dieing). For the poor the situation is simple: either they pay the loans or they lose everything they have and probably even die of hunger.
A lot of muslim and African states are in that boat. If the US, yes, the international monetary system is under US control, frankly because nobody else will pay for it. If the US ever decides not to cover Pakistan's debts starvation is exactly what will happen in Pakistan.
Idk there have been other examples of bigger sovereign defaults - Argentina (multiple times), Thailand, Mexico - that didn't have anything like that effect. I'm not an economist or an expert on this topic. But investors losing their money due to changing market conditions is pretty common.
A lot of muslim and African states are in that boat. If the US, yes, the international monetary system is under US control, frankly because nobody else will pay for it. If the US ever decides not to cover Pakistan's debts starvation is exactly what will happen in Pakistan.