SBP governor denies imports at complete halt

KARACHI:

State Bank of Pakistan (SBP) Governor Jameel Ahmad has dispelled the impression that the imports into the country had come to a complete halt.

“We have been financing imports worth around $5 billion a month [for the past several months],” he told traders during his recent visit to the Karachi Chamber of Commerce and Industry (KCCI).

However, Pakistan’s economic activities are gradually slowing down towards the point of no return amid high financial and as well as political crises.

Factories are closing one after the other partially or completely because of the non-clearance of imported raw material from the Karachi port because of an acute shortage of US dollars in the system.

There are some 6,000 containers full of imported goods stuck at the Karachi port.

Most of the containers are lying there for at least more than 60 days.

The business community is running from pillar to post to have them cleared, but banks are not processing their documents because of the lack of a payment arrangement in the required foreign currency -- US dollars.

Talking to The Express Tribune, Pakistan Business Council (PBC) CEO Ehsan Malik said speculations suggested that the business community required roughly a sum of $4 billion to have their stuck-up containers cleared at the port, export the long-pending share in profit to shareholders abroad and make other international payments like fees to various institutions, etc.

“However, no concrete data is available to check what is the actual value of the imported goods stuck-up at the Karachi port for clearance so that they can be taken to the factories,” he added.

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The speculated required amount at $4 billion is slightly less than the country’s existing foreign exchange reserves at $4.6 billion at present.

They are barely enough to finance imports for three weeks.

Members of the business community said the containers carried almost all the goods one could think of including food (wheat, pulses, onions and other perishable items); medicines (and its raw material); X-ray films and other medical equipments; 600-700 refrigerated containers carrying temperature-controlled sensitive goods including lifesaving drugs; and raw material for textiles and soaps; shampoos and detergents; LED lights; bearings; etc.

Factories are closing in wait for clearance of some minor goods (raw material) from the port, as they could not complete finished goods without them.

For example, the single largest export industry -- the textile manufacturers -- need major colours to perform the process of dying and printing of fabrics.

They, however, are waiting for clearance of some basic colours from the port without which the dying and printing process cannot start.

Accordingly, the export industry’s production process is on halt partially or completely.

The containers have remained stuck-up at the port despite industrialists, traders and commercial operators staging a protest outside the SBP building to press the central bank to provide the required foreign exchange for the clearance of the  containers.

Later, the SBP governor visited the business community at Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and KCCI on January 19 and assured them to develop a framework to clear the containers as soon as possible.

KCCI President Mohammad Tariq Yousuf said his body was in constant touch with the central bank and hoped the containers would start receiving clearance from next week starting from January 23.

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The central bank had sent a pro forma seeking 21 details regarding the goods lying at the ports including their names, number of containers, HS codes, etc.

“We have made the pro forma available to all businessmen in the country (through uploading it on the website). We have so far received 3,000 applications (filled pro forma) and the same have been submitted to the central bank on Saturday (January 21),” read a statement.

The non-clearance of goods from the port has started slowing down production activities across the industrial sectors of the country.

While speaking at KCCI, the SBP governor said it could initiate a process to clear the goods once it had the details as to what are those goods and how much foreign exchange was required for them.

Members of the business community said the central bank had allowed the import of goods on four to six-month credit from international raw material suppliers. However, they added that banks were not processing these documents either.

Former KCCI president Abdullah Zaki said international suppliers were ready to dispatch goods on a credit for up to one year to Pakistan.

Banks, however, were not processing these documents as well,” he lamented. “This is not the crisis of foreign exchange, but a crisis by design. The government’s agenda is apparently something else,” he added.

To recall, former finance minister Miftah Ismail had asked the business community in May-June 2022 to slow down imports for 60 days only to manage with low foreign exchange reserves and avert the likely default on international payments.

PBC CEO Malik said the government was seen ready to take tough decisions to revive the stalled International Monetary Fund (IMF) loan programme of $6.5 billion.

The IMF and other multilateral and bilateral creditors might provide a sum of $3-4 billion in new debt in the short-to-medium run. This, however, will not address the core issues in the economy.

“We have to take the long-pending economic reforms to come out of the recurrent crisis of low foreign exchange reserves. We have to fix issues on utility firms, improve governance, restructure them and privatise them in the future [at a suitable time],” the PBC CEO elaborated.

“We should also opt for restructuring foreign debt for a longer period…to fix the faltering economy,” he added.