Thousands of containers filled with foodstuffs, raw materials and medical equipment have been stopped at the port of Karachi due to lack of foreign exchange in the country.
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Banks are unable to issue ‘letters of credit’ to importers due to shortage of foreign currency dollar in Pakistan. The country’s economy is already on the brink of collapse due to rising inflation. Abdul Majeed, a member of All Pakistan Customs Agents Association, said, “I have been doing business for the last 40 years and I have never seen such a tough time.” Karachi port, where several shipping containers filled with pulses, pharmaceuticals, diagnostic equipment and chemicals for Pakistan’s manufacturing industries are stuck awaiting payment guarantees.
According to Customs Association Chairman Maqbool Ahmed Malik, “Thousands of containers are stuck at the port due to lack of dollars.” He added that port operations have reduced by at least 50 percent. The State Bank’s foreign exchange reserves fell to less than six billion dollars this week. This is the lowest level of dollar reserves in the last nine years.
According to analysts, Pakistan’s declining economy and emerging political crisis have devalued the rupee, while inflation has reached its highest level in decades. Last year’s devastating floods and lack of energy have also made a big difference. Pakistan currently owes $274 billion, which is only enough to pay for one month’s worth of imports.
The country had high hopes from the IMF deal, which was done during the tenure of the previous government, but the installment of the loan resulting from this deal has been stalled since September last year. The IMF is also demanding Pakistan end remaining subsidies on petroleum products and electricity, while Pakistani Prime Minister Shehbaz Sharif has requested the IMF to consider the current “dreadful situation” before taking any major decisions. It takes some time to deal with.
“Livelihood has become difficult,” says Zubair Gul, 40, a daily wage earner from Karachi. “I have to stand in line for two or three hours to buy subsidized flour and I can’t afford to pay the price of flour in normal shops,” he told AFP.
According to political analysts, it would be political suicide for the current government to carry out the campaign for the upcoming elections and implement the strict conditions of the IMF. But on the other hand, it is difficult for Pakistan to get the next installments of the loan without fulfilling the conditions.
Problems of the business community
Abdul Rauf, an importer of grains and pulses in Pakistan, said he had only 25 days’ worth of stock left and that “without letters of credit” from banks, these items would become “extremely scarce” during the holy month of Ramadan. ‘It will happen. “I have never seen a situation where people are so worried,” he told news agency AFP.
Lack of foreign exchange has also added to the woes of textile owners. This sector accounts for about 60 percent of the country’s imports. According to Baba Latif Ansari, head of the Labor National Movement Union, about 30 percent of the power looms in Faisalabad, the center of the textile industry, have been temporarily closed. “I have never seen such a situation before,” he said.
