The rupee declined to a record new low on Tuesday, trading against the US dollar at 222 in the open market at mid-day trade.
The quick depreciation of the local currency within a matter of a few hours drew sharp criticism from politicians and analysts expressed concern over the economic fate of the country.
Former prime minister and PTI Chairman Imran Khan said that when he was ousted via a vote of no confidence, the dollar stood at Rs178.
“Today it is Rs224 and in free fall despite IMF agreement,” he said.
“The economic meltdown shows Sharifs never had any expertise in running economy or administration. Their only expertise is looting, money laundering and getting NROs,” Khan alleged.
‘Time to stop this madness’
“It’s time to stop this madness now,” exclaimed PTI leader and former finance minister Asad Umar in a video message posted by the party’s official handle.
Umar said that Pakistan will fall so deep into an economic mess that it will become extremely difficult to pull it out if such a free fall of the rupee continues.
“For God’s sake this unnatural system made by a foreign hand must be brought to an end,” he urged, in reference to PTI’s claim that former prime minister Imran Khan’s removal through a vote of no-confidence was a “regime change conspiracy” due to what was his “independent foreign policy”.
Earlier, tweeting with his own handle, Umar remarked that “political uncertainty is bleeding the economy and inflicting tremendous pain on the people”.
“Time to stop this badly conceived, badly executed, totally gone wrong experiment. Pakistan cannot be made to suffer anymore for poor decisions,” he wrote.
‘Rupee sunk by 10 units ever since deal with IMF’
PTI leader Fawad Chaudhry, in a press conference, noted that the local currency has sunk by Rs10 “ever since an agreement was reached with the International Monetary Fund (IMF)”.
Journalist Mohammad Malick termed the development “untenable” and foresaw “killing inflation” ahead if the State Bank of Pakistan does not intervene and “restore sanity”.
“We need a full time SBP governor and [Minister for Finance] Miftah Ismail to refocus on this issue,” he said, adding: “Free fall of rupee guarantees economic disaster and free fall of government too.”
‘Rs10 lost in two days’
Economic journalist Shahbaz Rana drew attention to the fact that the rupee had lost Rs10 in value in just two days.
He called upon the finance minister to “no more sit idle” and let the rupee sink like this.
“SBP is without a governor for the last 75 days,” he lamented, calling it the “height of government indecisiveness”.
He warned that if the dollar’s ascent is not controlled, petrol and electricity prices will increase to “unimaginable levels”.
Rupee falls against dollar and pound
Former banker and political economist Yousuf Nazar noted at noon that the rupee has fallen to an all time low of Rs219 against the dollar and that it has also registered a decline against the pound, dropping to Rs264.
‘Are we waiting for Maryam Nawaz?’
Journalist Shahzad Iqbal in vexation wrote whether the government is waiting for Maryam Nawaz to tweet “Miftah please look into it”.
He said the country has seen no respite despite the IMF and Pakistan striking a staff level agreement and the assurance of disbursements rising to $4bn.
“Government seems to be clueless and has not appointed an SBP governor in the last three months,” Iqbal said.
100-dollar bill stashed away for grand kids
On a lighter note, Alpha Beta Core CEO Khurram Schezad tweeted a photo of a 100-dollar bill that he has preserved to give to his grand kids if he is alive by then.
Gas crisis to aggravate as supplier refuses to deliver LNG cargo
- ENI to not deliver February’s cargo purchased at cost of 12.14%.
- This will result in reduced supplies to power sector.
- End consumers to get costly electricity.
ISLAMABAD: Pakistan is expected to witness an aggravating gas crisis in February as an Italy-based LNG trading company, ENI, intimated that it will not be able to deliver its term LNG cargo due on February 6-7 by claiming the force majeure, The News reported Monday citing a senior official of the Energy Ministry.
“The gas deficit will soar as imported LNG will reduce to 700mmcfd as only five cargoes, at the price of 13.37% of Brent, and 2 cargoes, at 10.2% of Brent under GtG agreements with Qatar, would be available in February. There will be no LNG cargo from ENI at the cost of 12.14% in the month of February. And this will increase the gas crisis in the country.”
The news has disturbed the top mandarins of the Petroleum Division as the country is already facing an acute gas crisis. The crisis has been affecting domestic users in some main cities, with little to no pressure.
The government under its gas load management plan promised gas supply to domestic consumers for cooking times in winter — three hours in the morning from 6am to 9am, two hours from 12 noon to 2pm for lunch, and three hours from 6pm to 9pm for dinner. The ground realities speak otherwise.
Relevant authorities say the impact of ENI backing out will come in the shape of reduced supplies to the power sector and the projected supply of 325mmcfd to the sector next month will not be available.
The reliance on furnace oil-based electricity will increase and end consumers will get costly electricity. The captive power plants will be supplied gas at 50% and supply to fertiliser plants, compressed natural gas (CNG) and local industry shall remain discontinued.
Earlier, the Petroleum Division had claimed that the ENI from January 2023 onward will not default but that is not the case.
When contacted, ENI spokesperson also confirmed the development, saying: “February delivery disruption is beyond the reasonable control of ENI and due to an event of Force Majeure. ENI does not benefit in any way from the situation.”
According to the senior official, ENI defaulted five times in 2022; it failed to provide LNG cargoes in the months of March, May, July, September, and November.
Despite economic crisis, $1.2bn worth of cars imported in just six months
- Pakistanis spent $1.2 billion on import of cars and other related stuff.
- SBP reserves can only cover three weeks’ of imports.
- Huge spending on imports of luxuries calls for shift in govt policy.
ISLAMABAD: Despite efforts to conserve foreign exchange reserves by restricting imports, Pakistan spent $1.2 billion (or Rs 259 billion) on the import of transportation items, including luxury cars, high-end electric vehicles, and their parts, during the last six months, reported The News.
Pakistan is facing an acute shortage of dollars and has less than $5 billion in its reserves which is hardly sufficient to finance three-week of its imports.
Despite the overall reduction in imports of transportation vehicles and other items compared with last year, the economy was still burdened with heavy outflows for buying expensive luxury vehicles and useless items.
During these six months, the country imported completely built units (CBU), completely knocked down/semi knocked down (CKD/SKD) of $530.5 million equivalent to 118.2 billion.
Since CKD kits are not allowed to be imported, yet multimillions of dollars of these kits are being imported, harming the local industry and their production.
The economy is suffering, but hefty spending on cars and other vehicle imports is raising a lot of questions about the government’s policy of halting imports related to the industrial and commercial sectors.
Road motor vehicles (build units, CKD/SKD), $1.03 billion or Rs230.5 billion were spent during these six months. Last year in the same period, the spending on these vehicles was $1.87 billion, showing a reduction of 63%.
Under the completely built units (CBU) during July-Dec 2022-23 imports of buses, trucks and other heavy vehicles imports were $75 million (Rs16.6bn), motor cars with $32.6 million.
Under the CKD/SKD, imports of buses, trucks, and other heavy vehicles imports were $722.5 million (Rs161 billion), while motor car imports were recorded at $498 million (Rs111 billion). Motorcycle imports also stood at $27.6 million.
Besides, the parts and accessories imports stood at $188.6 million (Rs42 billion). Similarly, $47.7 million were spent on the import of aircraft, ships, and boats.
Only in December, the transport sector’s imports stood at $140.7 million (Rs31.6 billion). Of this, $47.5 million or 11.3 billion rupees were spent on the imports of cars, $27 million on parts and accessories, $3.6 million on motorcycles import, $25 million on buses, trucks, and heavy vehicles, and another $22.4 million on the import of aircraft, ships, and boats.
Reportedly, despite economic crises, the incumbent government has lifted a ban on the import of luxury cars recently. This is one of the major sources of dollar outflow from the economy.
Textile sector warns of protest on untimely clearance of imported cotton
- APTMA chief says textile exports will be limited to $16-17bn this year.
- He reveals industry exports raw cotton four times compared to imported value.
- Industry player warns 7m people will be unemployed in January.
LAHORE: As Pakistan struggles to boost depleting foreign exchange reserves, the textile owners threatened the government of staging a protest due to the delay in the clearance of imported cotton containers at Karachi port, The News reported Friday.
All Pakistan Textile Mills Association (APTMA) Chairman Hamid Zaman said: “The textile industry will be forced to protest if the government doesn’t clear the imported cotton coming to Karachi.”
The textile industry would fail to meet an export target of $25 billion in the current year on the non-availability of raw materials, mainly raw cotton, he said during a programme organised by the Lahore Economic Journalist Association.
“This year, textile exports will be limited to $16-17 billion,” he predicted.
The textile industry imports raw cotton and after value addition exports it at four times the imported value. Thus, the government should allow exporters to import 35% of the export value.
The APTMA chief, however, warned that if things are not controlled, seven million people associated with the industry will be unemployed in January.
“The industry was left with 60 days’ of raw materials only and if timely clearance of already arrived cotton will not start from the port, textiles will completely shut down. This will result in unemployment of 25 million people across the country,” he warned.
Zaman informed that almost 30-50% of the textile industry of Punjab, Khyber Pakhtunkhwa, and Sindh had already been completely or partially closed.
“The textile industry has so far ordered 1.7 million bales of cotton from the US, out of which 0.531 million cotton bales have been dispatched while 100,000 bales have already arrived at Karachi port with a value of more than $300 million.”
APTMA chief urged the government to instruct commercial banks as well as the State Bank of Pakistan to ensure the timely opening of letters of credit for the cotton importers to avoid any export crisis.
In response to a question, Zaman admitted that some exporters could not bring their export amount back to Pakistan due to the instability of the exchange rate. He also urged the government to take action against those who were hoarding the US dollar, vowing that the APTMA would support the cause.
Zaman further pointed out that demurrages and detention charges on imported goods had exceeded the value of the goods that foreign companies had to pay.
“So far, Rs2 billion in demurrages and detention charges have been charged, which are increasing with time, and since last few days the traders and banks will be at odds with each other.”
APTMA Senior Vice Chairman Kamran Arshad said a severe shortage of raw cotton was there in the local market as the country had produced only 4.6 million cotton bales.
He mentioned that 15 million cotton bales were required to achieve $20 billion in exports.