Pakistan’s economy grinding to a halt as dollars dry up
- Shipping containers are stuck waiting for payment guarantees, with banks refusing to issue new letters of credit for importers
- Pakistan’s enormous national debt has made it ‘hugely difficult’ for its people to get by as they struggle to buy essential items
A shortage of crucial dollars has left banks refusing to issue new letters of credit for importers, hitting an economy already squeezed by soaring inflation and lacklustre growth.
“I have been in the business for the past 40 years and I have not witnessed a worse time,” said Abdul Majeed, an official with the All Pakistan Customs Agents Association.
He was speaking from an office near Karachi port, where shipping containers are stuck waiting for payment guarantees – packed with lentils, pharmaceuticals, diagnostic equipment and chemicals for Pakistan’s manufacturing industries.
“We’ve got thousands of containers stranded at the port because of the shortage of dollars,” said Maqbool Ahmed Malik, chairman of the customs association, adding that operations were down at least 50 per cent.
State bank forex reserves this week dwindled to less than US$6 billion – the lowest in nearly nine years – with obligations of more than US$8 billion due in the first quarter alone.
The reserves are enough to pay for around a month of imports, according to analysts.
