Amid blackouts and severe foreign currency shortage, Pakistan’s economy at risk of collapse
British publication Financial Times has warned that Pakistan’s economy is at risk of collapse with the government’s “failure to revive” an International Monetary Fund (IMF) deal, Geo News reported.
According to the report, rolling blackouts and a severe foreign currency shortage are making it difficult for businesses to continue operations.
Shipping containers full of imported goods are being piled up in ports because buyers can’t secure the dollars to pay, Geo News reported.
“The association of airlines and foreign companies has warned that capital controls imposed to protect dwindling foreign exchange reserves are hampering the repatriation of dollars. said it was closing or shortening hours to conserve energy and resources.The difficulties were exacerbated by a nationwide power outage that lasted more than 12 hours on Monday,” the British newspaper reported.
“Many industries have already closed, and if those industries are not reopened soon, some of the losses will be permanent,” said Sakib Sherani, founder of Macro Economic Insights. told Geo News. The Financial Times, citing analysts, said the Pakistani economy was “becoming unsustainable” and could end up in a situation similar to that of Sri Lanka if this trend continues. The publication also warned that the country could default on its debt in May if “the situation continues”.
“Every day counts now,” former World Bank adviser Abid Hasan said. Things are very disappointing, and will be at best… Plaster.”
Pakistan’s Planning Minister Afsan Iqbal told the FT that the country had cut imports “significantly” to save the dollar.
“If you just meet the IMF’s conditionality the way they want it, there will be riots in the streets. We need a phased program…the economy and society cannot absorb the shocks and costs of front-loaded programs,” Iqbal said.
Following devaluation of Pakistani rupee on open and interbank markets, the Pakistan Stock Exchange (PSX) benchmark his index rose, scoring more than 1,000 points, Geo News reports. .
Tahir Abbas, head of research at Arif Habib Limited, said the rupee’s sharp depreciation had sparked positive sentiment in the market.
“The driving force behind the market is the market-based exchange rate of the rupee. This has helped remove the uncertainty surrounding investors,” Abbas said, reported Geo News.
Analysts said the government’s move helped the market recover and bolstered investor confidence, which had been hit hard amid uncertainty over the revival of the International Monetary Fund’s (IMF) programme.
With a mini-budget expected within the next eight to 10 days, Abbas said gas and electricity prices could also rise, and more taxes could be imposed, including on the terms of moneylenders around the world. added that there is
The Pak rupee posted its biggest daily decline against the dollar in more than 20 years after the hard-line IMF forced the government to loosen its grip on the currency, The News said. reported.
The Pak currency fell 9.61% or Rs 24.5 against the US to a record low of Rs 255.43 after the government decided to end control of the rupee dollar exchange rate as part of his IMF terms. . The drop of more than 9% was the highest since October 30, 1999, when the currency fell 9.4%.
“The National Bank of Pakistan appears to be adjusting its exchange rate to match the market rate. It’s curbing the flow of dollars,” Saad said. Ali said. Capital markets experts reported The News.