Thousands of containers packed with essential food, raw materials and medical equipment have been held up in Pakistan’s Karachi port as the country grapples with a desperate currency crisis.
Critical dollar shortages have caused banks to refuse to issue new letters of credit to importers, battering an economy already gripped by skyrocketing inflation and lackluster growth.
“I’ve been in business for the last 40 years and I haven’t seen a worse time,” said Abdul Majeed, an official with the All Pakistan Customs Brokers Association.
He was speaking from an office near the port of Karachi, where shipping containers are stuck awaiting payment guarantees, filled with lentils, pharmaceuticals, diagnostic equipment and chemicals for Pakistan’s manufacturing industries.
“We have thousands of containers stranded in the port due to a shortage of dollars,” said Maqbool Ahmed Malik, president of the customs association, adding that operations were down by at least 50 percent.
State banks’ foreign reserves have been drawn this week to less than $6 billion, the lowest level in nearly nine years, with obligations of more than $8 billion due in the first quarter alone.
The reserves are enough to pay for about a month of imports, according to analysts.
Pakistan’s economy has collapsed alongside a simmering political crisis, with the rupee plummeting and inflation running high for decades, while devastating floods and severe energy shortages have added to the pressure.
The South Asian nation’s massive national debt (currently $274 billion, or nearly 90 percent of gross domestic product) and the relentless effort to pay it off makes Pakistan particularly vulnerable to economic shocks.
Islamabad has pinned its hopes on an IMF deal brokered by the last Pakistani leader, Imran Khan, but the last payment has been due since September.
The global lender is demanding the withdrawal of remaining subsidies on petroleum products and electricity intended to help the population of 220 million with the cost of living.
Prime Minister Shehbaz Sharif this week urged the IMF to give Pakistan a breather while it tackles the “nightmare” situation.
Zubair Gul, a 40-year-old father of four and day laborer in Karachi, said it has become “enormously difficult” to live on his earnings.
“I have to queue for two or three hours to buy subsidized flour, regular prices are not affordable,” he told AFP.
For Shah Meer, an office worker, borrowing from relatives or using credit cards are the only ways to survive.
“A common man cannot afford to buy milk, sugar, pulses or any necessities you name,” he said.
With elections scheduled for the end of the year, implementing the harsh conditions demanded by the IMF, or campaigning for it, would be political suicide, but Pakistan is unlikely to get new credit without making at least some cuts.
On Thursday, the United Arab Emirates agreed to transfer $2 billion owed by Pakistan and give the country an additional $1 billion loan, helping it avoid an immediate default.
Islamabad got some relief last week when donors pledged more than $9 billion to help recovery efforts after devastating monsoon floods left nearly a third of the country under water last year.
But that cash, even when it arrives, won’t help the current currency crisis, so Sharif continues to press allies, including Saudi Arabia, Qatar and Beijing, who have invested billions as part of the China-China Economic Corridor project. Pakistan.
The currency crisis has deepened the problems of textile manufacturers, which are responsible for about 60 percent of Pakistan’s exports.
They have suffered as a result of the country’s power shortage, damage to cotton crops during floods and a recent tax hike.
The combined problems have led to about 30 percent of the power looms in the city of Faisalabad, the hub of the textile industry, temporarily shutting down, while the remainder work every other day, said Baba Latif Ansari, leader of the Movement. Labor Qaumi. Union.
“More than 150,000 workers who had come from surrounding towns to work here have had to return due to lack of work in recent weeks. Others are sitting at home waiting for the situation to improve,” he told AFP.
Some factories have complained about the backlog of imported raw materials such as dyes, buttons, zippers and spare parts for machinery being held up in the Karachi port.
Abdul Rauf, an importer of grains and pulses, said he has only 25 days of stock left and without the release of dollars, there will be “immense shortages” during the holy month of Ramadan, which begins in March.
“I have never witnessed a situation where people are so worried,” he told AFP.
