Pakistan's economy on the verge of collapse - Financial Times warns

 Pakistan is facing problems to import food, raw materials and energy due to the shortage of dollars

Pakistan’s economy is on the verge of collapse says a Financial Times analysis. The country is facing shortage of dollars and thousands of containers are stuck up at the seaports. Analysts warn that Pakistan’s economic situation is becoming untenable and is at risk of following Sri Lanka, where a lack of foreign reserves triggered severe shortages of essential goods and eventually led to a default in May, the British daily said.

The report quoted officials as saying that factories such as textile manufacturers were closing or cutting hours to conserve energy and resources.

The difficulties were compounded by a nationwide blackout on Monday that lasted more than 12 hours. Already a lot of industries have closed down, and if those industries don’t restart soon, some of the losses will be permanent.

Foreign reserves held by the central bank have dropped to under $5 billion, less than a full month of imports with the federal government remains in a deadlock with the IMF over reviving a $7 billion bailout package that stalled last year.

Analysts said this included restricting banks from opening letters of credit for importers, leading a steel industry body this week to threaten halting production.

The IMF and the PM Shehbaz Sharif-led government are at loggerheads over the former’s demand that Pakistan accepts economic reforms such as raising subsidised energy prices.

If we just comply with the IMF conditionalities, as they want, there will be riots in the streets,” Planning minister Ahsan Iqbal told FT. “We need a staggered programme.   The economy and society cannot absorb the shock or cost of a front-loaded programme.”

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