Pakistan’s economy is in danger of collapsing due to chronic shortages of foreign money and outages.
According to the sources, the government’s “failure to resurrect” an IMF pact puts Pakistan’s economy in danger of collapsing, according to a report by experts.
Rolling blackouts and a chronic shortage of foreign money are making it impossible for firms to operate, claims the research.
As a result of the buyers’ inability to get the funds to pay for them, shipping containers full of imports are accumulating at ports, according to the statement, experts reported.
“Airlines and international business associations have warned that capital limits put in place to safeguard depleting foreign reserves have prevented them from bringing money home. According to officials, factories like those that produce textiles are closing or reducing their hours in order to save energy and resources. A more than 12-hour-long countrywide blackout that occurred on Monday made things worse ” According to the sources.
According to Sakib Sherani, the creator of Macro Economic Insights, “A lot of industries have already shut down, and if those industries don’t reopen quickly, some of the losses will be irreversible.”
According to economists cited by the Financial Times, Pakistan’s economic condition is “becoming untenable” and, if it continues, it may resemble Sri Lanka’s. The article further cautioned that if the “crisis endures,” the nation might declare bankruptcy in May.
“Now, every day counts. The solution is just unclear, according to Abid Hasan, a former World Bank advisor. He continued, “Even if they get a billion [dollars] or two to roll over, it’s going to be at best just a band-aid.”
Ahsan Iqbal, Pakistan’s Minister of Planning, told the Financial Times that the nation had “dramatically” cut back on imports in an effort to save money.
“There will be rioting in the streets if we simply adhere to the IMF’s requirements as they want. We require a staggered schedule. A front-loaded program’s costs and shock are too great for the economy and society to handle,” said Iqbal.
The benchmark index of the Pakistan Stock Exchange (PSX) surged and increased by more than 1,000 points as a result of the devaluation of the Pakistani rupee in the open and interbank markets, according to a report from experts.
Tahir Abbas, the head of research at Arif Habib Limited, commented on the occurrence by stating that the sharp decline in the rupee has created a bullish mood in the market.
“The rupee’s market-based exchange rate is what drives the market. The investors’ uncertainty has been reduced as a result of this “Abbas stated, according to sources.
The government’s actions, according to the expert, are assisting the market’s recovery and boosting investor confidence. Investors were in a precarious position due to the uncertainty surrounding the potential reactivation of the International Monetary Fund’s (IMF) programme.
Abbas noted that since a mini-budget is anticipated in the next eight to ten days, more taxes and an increase in gas and electricity rates may also be implemented, in addition to the terms of the international lender.
The Pak rupee saw its worst one-day loss against the dollar in more than 20 years as a result of the government loosening control over the currency due to rapidly depleting foreign exchange reserves and an unyielding IMF, according to the experts.
The Pakistani rupee dropped 9.61 percent, or 24.5 rupees, to a record low of Rs 255.43 against the US dollar as compared to Wednesday’s close of Rs 230.89 after the government decided to stop controlling the rupee-dollar exchange rate as part of the IMF requirement.
The currency’s drop of almost 9% was the steepest since October 30, 1999, when it fell by 9.4%.
According to Saad Ali, a capital market specialist, “The State Bank of Pakistan is seemingly modifying the exchange rate to the market rate – closer to open market to address the expanding discrepancy between the official and open market rate and to curb the flow of dollars through the informal market.”