REPORT: PAKISTAN COULD enter bankruptcy.

World News

Islamabad: With more than 8,500 containers still stranded in Pakistan’s seaports, The Express Tribune claimed that worries about the financial situation had grown to the point where experts expressed anxiety about 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 likewise 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 may harm potential future investment opportunities.

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

Pakistan was requesting that the International Monetary Fund issue a loan (IMF). Following the resurrection, 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 last week that they have been resolving 5,000–6,000 cases per month. Since May 2022, 33,000 have been solved. But in order to reduce the impact on daily economic and social life, many firms that were formerly essential have been deemed no longer necessary.

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

The supply chain has suffered as a result of “substantial reductions” in its inventory levels. According to an article 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 sorts of firms.

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