Pakistan is facing a crisis over balance of payments (BoP) even as the decreasing value of the Pakistani rupee leads to an increase in the price of imported goods Image Courtesy Agencies
Islamabad: Even as Pakistan faces an acute shortage of essential items such as food and medicine, the people in the country may soon find it difficult to buy fuel for their vehicles.
A report in Pakistani publication ‘The Dawn’ quoted traders and industry sources in Pakistan as saying that the country may face a shortage of fuel supplies next month since banks have stopped finance and facilitation of payments for imports due to depleting foreign exchange reserves.
Pakistan is facing a crisis over balance of payment (BoP) even as the decreasing value of the Pakistani rupee leads to an increase in the price of imported goods.
Over the past several months, Pakistan has been hit by a severe economic crisis. The Pakistani rupee has created an unwanted record by hitting a new low at 270 per dollar. The prices of petroleum and gas have also hit new highs amid soaring inflation in Pakistan.
With Pakistan going through a severe economic crisis, the ruling coalition has been forced to take several harsh decisions in order to secure a $6.5 billion bailout program from the International Monetary Fund (IMF).
These measures, which include an increase in fuel prices and loosening the government’s grip on the currency leading to more inflation, may increase the financial burden on the common people of Pakistan.
These harsh measures were taken by the Pakistan government ahead of the arrival of an IMF team on Tuesday for a loan review regarding the next loan tranche after a delay of several months.
Petroleum and gas comprise a large part of Pakistan’s import bill as the country fulfils more than a third of its power needs through imported natural gas, prices for which saw a sharp increase due to Russia’s invasion of Ukraine.
“There is no shortage this fortnight. If we don’t have LCs (letters of credit) open right now, we might see shortages in the next fortnight,” a senior official at one of the oil companies was quoted as saying by Reuters.
A letter of credit, which is issued by the importer’s banks, is used as a standard form of payment guarantee during the oil trade to the exporter.
Global oil traders, however, are avoiding economically unstable nations such as Pakistan and Sri Lanka due to a major shortage of foreign exchange reserves.
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