Pakistan reserves getting empty, nation may get bankrupt: Reports

Pakistan: The Asian country of Pakistan has been facing a huge financial crisis and is at risk of getting bankrupt. Such reports have become viral after the situation in the country alarmed as 8,500 containers were stuck up at the country’s seaports.

The coffers of Pakistan are also running dry as the nation has been witnessing a spike in food rates, causing a financial spike. Due to Pakistan’s persistent tardiness in making payments, there is a severe lack of dollars, which prevents importers from clearing more than 8,531 containers. Shipping companies are also pulling back from Pakistan’s activities.

Pakistan’s central bank has only USD 4.4 billion in reserves, enough to cover three weeks’ worth of imports. However, there are still requests to open more lines of credit that are outstanding and containers that need to be cleared that total between USD 1.5 billion and USD 2 billion.

The government has halted dividend payments totalling more than USD 2 billion, which may harm potential future investment opportunities. The country’s inflation rate was 25 percent, and the supply chain’s failure could lead to hyperinflation in a place where there may already be higher levels of imported inflation as a result of sharp currency devaluation.

The International Monetary Fund (IMF) was also expected to provide money to the nation, and following the rebirth, Pakistan’s reserves briefly increased to USD 8.8 billion before falling down to USD 7.8 billion when Miftah Ismail left the Finance Ministry’s leadership.

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.

Last week, the governor of SBP stated that they have been solving around 5,000–6,000 cases every month. According to the reports, since May 2022, 33,000 cases have been solved. Several companies that are essential for the continuation of daily economic as well as social activity have been designated as non-essential to reduce the cost of imports.