REPORT: PAKISTAN COULD enter bankruptcy.

World News

Islamabad: With more than 8,500 containers still stranded at Pakistan’s seaports, The Express Tribune reported that worries about the financial crisis had grown to the point where experts expressed alarm over the possibility of the country going bankrupt.

In addition to running out of money, Pakistan is also experiencing a rise in food prices. Pakistan’s finances are also in serious trouble.

On the one hand, importers are unable to clear more than 8,531 containers because of a cash crunch. On the other hand, the shipping firms are now threatening to halt operations with Pakistan because of its failure to make payments on time.

The central bank of Pakistan has pitiful USD 4.4 billion in reserves, barely enough for three weeks of imports, while the estimated needs to clear the containers and pending requests for opening more letters of credit stand in the range of USD 1.5 billion to USD 2 billion, according to sources in the industry and in government, according to The Express Tribune.

Additionally, the government has halted dividend payments totaling over USD 2 billion, which will harm potential future investment opportunities.

In a nation that may be in for more imported inflation due to sharp currency devaluation, where Pakistan already has a 25% inflation rate, the supply chain breakdown could result in hyperinflation.

Pakistan was requesting that the International Monetary Fund release a loan (IMF). Following the revival, Pakistan’s reserves briefly increased to USD 8.8 billion before falling to USD 7.8 billion once more when Miftah Ismail resigned as the Finance Ministry’s director, according to The Express Tribune.

The imports reflect the strain on the economy. A few months ago, the central bank began using administrative controls and pressure techniques to stop the majority of imports.

The governor of SBP stated this week that they have been resolving 5,000–6,000 cases each month. Since May 2022, 33,000 have been solved. To reduce the cost of imports, many companies that are necessary for the continuation of daily economic and social life have been designated as non-essential.

The industries continued to temporarily shut down in the meantime. Beco Steel Ltd., one of the industries, stopped production until further notice because letters of LCs were taking too long to be approved.

The supply chain has suffered as a result of “significant reductions” in its inventory levels. According to a report in The Express Tribune, the list of non-essential import items under the Import Policy Order 2022 has affected not only these industries but also about 100 different types of businesses.

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