New Delhi: British publication Financial Times has warned that Pakistan’s economy is at risk of collapse with the government’s “failure to revive” the International Monetary Fund (IMF) deal, Geo News reported.
According to the report, rolling blackouts and acute shortage of foreign exchange are making it difficult for businesses to continue operating.
Geo News reported that shipping containers filled with imports are piling up at ports as buyers are unable to secure dollars to pay for them.
“Airlines and associations of foreign companies have warned that they have been barred from repatriating dollars by capital controls imposed to protect dwindling foreign reserves.
Officials said factories such as clothing manufacturers were closing or cutting hours to conserve energy and resources. The difficulties had increased. A UK newspaper reported that there was a nationwide blackout on Monday for more than 12 hours.
“Already a lot of industries have shut down, and if those industries don’t restart soon, some of the losses will be permanent,” Saqib Sherani, founder of Macro Economic Insights, told Geo News.
Citing analysts, the Financial Times reported that Pakistan’s economic situation is “becoming untenable”, and could possibly lead to a Sri Lanka-like situation if the situation persists. The publication also warned that the country could default in May if “the situation persists”.
Abid Hasan, a former World Bank consultant, said, “Every day counts now. It is not clear what is the way.” Too bad it’s just going to be a Band-Aid at best.”
Pakistan’s planning minister Ahsan Iqbal told the FT that the country has “drastically” reduced imports in an effort to conserve the dollar.
Iqbal said, “If we follow the conditions of the IMF, as they want, there will be riots on the streets.
Geo News reported that following the devaluation of the Pakistani rupee in the open and interbank markets, the Pakistan Stock Exchange’s (PSX) benchmark index rallied and advanced by over 1,000 points.
Commenting on the development, Tahir Abbas, Head of Research, Arif Habib Ltd, said that a sharp fall in the rupee has created a positive sentiment in the market.
Geo News reported, “The driving factor behind the market is the market-based exchange rate of the rupee. This has helped in removing the uncertainty regarding the investors.
The analyst said the government’s moves are helping markets recover and boosting investor confidence – who were in a tight spot due to uncertainty over the revival of the International Monetary Fund (IMF) programme.
Abbas said with a mini-budget expected within the next eight to 10 days, gas and electricity tariffs could also see hikes and more taxes imposed – also terms of the global moneylender.
The Pakistan rupee registered its biggest fall against the dollar in more than two decades following a sharp drop in foreign exchange reserves and weakening of the IMF, The News reported.
The Pakistani currency declined 9.61 per cent or Rs 24.5 to hit a record low of Rs 255.43, following the government’s decision to end its control over the rupee-dollar exchange rate under the IMF condition. 230.89 Rs.
The more than 9 percent decline was the most since October 30, 1999, when the currency fell 9.4 percent.
Saad Ali said, “The State Bank of Pakistan is adjusting the exchange rate to the market rate – the rate of the open market to remove the wide gap between the official and open market rate and to prevent the flow of dollars through the informal market.” near.”
(with agency inputs)