Qaiser Waheed, the owner of a pharmaceutical company, has had a tough few weeks due to difficulties in clearance of import consignment.
Referring to this consignment, he says that 'it was raw material used in the preparation of antibiotic medicine which remained at the port for fifteen to twenty days and was not being cleared.'
The LC of this imported goods had been opened, but the bank was not providing dollars to pay this LC. The seller of this raw material abroad was asking for his money again and again. I had deposited the amount of this raw material in the bank and now the bank had to send this money abroad in the form of dollars, but these dollars were not being sent by the bank.
'The raw materials used in the manufacture of medicines, which are mostly in the form of salts, require a certain temperature to be preserved and must be quarantined so that they do not spoil, but after fifteen to twenty days. I was able to send the dollars abroad and after that my goods cleared, but during this period some of the goods also got damaged and I had to pay damage charges.'
Qaiser Waheed mentions these difficulties and says that it has become very difficult to get dollars at this time and most of the banks are not ready to give dollars.
This happened not only with Qaiser Waheed in the pharmaceutical sector, but more than four containers of onion, ginger and garlic were waiting for clearance for several days because the LCs opened for them by the banks abroad in dollar form. Payment was not being made.
After a representative organization of fruit and vegetable traders wrote a letter to the Ministry of Commerce, they were cleared by the government.
According to Sheikh Umar Rehan, who works in the field of edible oil, although LC payment of imported cargo of edible oil is among the priorities of the government so that there is no shortage in the country, yet their clearance is being delayed. Is.
Similarly, for crude oil, when a local refinery sent its tanker abroad, an LC for half the tanker was opened by the bank. The refinery had to pay full tanker fare, but the crude oil was received for half the tanker as the LC for the entire tanker was not opened by the bank.
These few cases of non-opening of LCs for import cargoes or delay in payment are a link in the long series of non-clearance of import cargoes in Pakistan due to shortage of dollars.
The dollar, its value and its availability remains the biggest issue in Pakistan at the moment.
Pakistan's Finance Minister Ishaq Dar, who claimed to control the value of the dollar, seems to have failed in this situation because on the one hand, the official rate of the dollar has reached 224 to 225 and on the other hand, when the importers approached the banks for dollars. If there are, they are not provided with dollars, while the price of a dollar has gone above 240 rupees in the gray market.
Pakistan is currently short of dollars and dollars are not available for clearance of import cargo. Sources of dollar inflows into the country are shrinking and foreign exchange reserves have fallen to a four-year low due to external debt repayments.
What was Ishaq Dar's claim on the dollar rate?
After the current government came to power, when Miftah Ismail became the finance minister, the rate of dollar increased and on July 29, 2022, the dollar went up to 240 against the rupee at the interbank level, which Miftah Ismail was criticized for. After that, the news of Ishaq Dar's return to the country started coming.
Before taking charge of the federal finance ministry at the end of September, Ishaq Dar, speaking to the BBC, outlined his priorities, which included stabilizing the local currency.
After returning to Pakistan and becoming Finance Minister, Ishaq Dar claimed in October that he would bring down the value of the dollar below 200 rupees.
After two months of this claim made by Ishaq Dar, the price of the dollar could not fall below 200 rupees, but at that time the price of the dollar has reached 224 rupees, while the price of the dollar has gone up to 230 in the open market. There is a mill.
However, a bigger problem is the non-availability of dollars, due to which the country's imported goods, including oil, edible oil, medicines, raw materials for the export sector, machinery and plants and other sectors, are sent to import cargo banks. Stranded at port due to non-payment for LC from
He says that due to this, the clearance of this raw material was not being done. I started running in this regard so that I can get clearance in any case.
How was the dollar under control in the previous ministry of Ishaq Dar?
Ishaq Dar kept the dollar at a certain level during his previous tenure as a minister, which was described by his political opponents and neutral economists as a mechanism to artificially control the dollar rate.
Khurram Hussain, an expert journalist on economic issues, while talking to the BBC, said, "They will not say that Ishaq Dar 'manipulated' the dollar rate, but he made it compulsory to 'manage' in the past period and he did it." have admitted.'
Yusuf Nazar, an economist and a former banker associated with Citibank, said to the BBC, "It is wrong that Ishaq Dar controlled the dollar in the last ministry. He was lucky that during this period the world level But crude oil prices had crashed and this benefited Pakistan in the form of spending fewer dollars on oil purchases.
He said that the attitude of the IMF was also soft at that time, which benefited Pakistan and the dollar rate did not increase in the country.
Why is the dollar rate not coming down now?
Khurram Hussain said in this regard that the reason for the dollar rate not falling is that Pakistan does not have enough foreign exchange to bring down the dollar rate.
He said that if Ishaq Dar 'managed' the dollar during his previous regime, it was because Pakistan had foreign exchange reserves.
He said that the only solution for the dollar rate to decrease is to bring dollars into the country, which are not coming from anywhere at the moment.
Now whether these dollars come from Saudi Arabia or from China or the IMF, it depends on the supply of dollars from these countries and institutions.
He denied the impression that Pakistan was close to defaulting. He said that the payment of bonds is one thing that Pakistan has done in the past, while the need for dollars for foreign trade is a different thing and the reason for the non-availability of dollars for import cargo is the balance of payments crisis in the country. is due to lack of.'
It should be noted that currently, according to the State Bank data, Pakistan has foreign exchange reserves of 6.7 billion dollars while the total reserves in the country are 12.6 billion dollars.
Pakistan also has to make external payments of more than 30 billion dollars in this financial year. Meanwhile, exports, remittances and foreign investment, the three main sources of dollars brought into the country, have been recording negative growth in the past few months.
Was the claim to lower the dollar rate a political slogan?
Economists say that Finance Minister Ishaq Dar's claim to bring down the dollar rate was a political slogan that had no connection with ground realities.
Yusuf Nazr said in this regard that when Ishaq Dar claimed that he would bring down the dollar rate, at that time he wanted to return to Pakistan and regain his old status.
He said that 'when Ishaq Dar did not understand the situation, then why did he take over the finance ministry.'
Regarding this, Khurram Hussain says that it is difficult to reduce the dollar rate, but it is not impossible.
He said that for this, first of all, dollars have to be obtained and Pakistan has to follow the path of IMF so that the doors of external funding can be opened for Pakistan.
When contacted, Pakistan's former finance minister Miftah Ismail said that he would not comment on the situation and continues to express his position on Twitter.
On the other hand, Ishaq Dar was contacted on his mobile phone for his statement and a message was also left.
An attempt was also made to know his position by contacting the Ministry of Finance, but no reply was made from him either.
How is the unavailability of dollars affecting the economy?
Due to non-availability of dollars in the country, clearance of import cargo is stalled or delayed due to which the industrial sector is facing difficulties in procuring raw materials.
Khurram Hussain said about this, "This situation will definitely affect the country's GDP growth negatively and its number may come down."
Yusuf Nazr said that "in the current situation, the rate of the dollar may go up to 250 to 300, which will be a big blow to the economy."
He said that it will have the most negative impact on the common man who will be forced to bear more inflation.
Yusuf Nazr also said that "in such a situation, the wheel of the economy will slow down further and due to the slowdown in the activities in the industrial sector, there may be retrenchment of employees which will increase unemployment."
"Many multinational companies are currently thinking of laying off employees and some of them leaving Pakistan because their activities have been affected due to the non-availability of dollars, so they can take their profits out in dollars." Going is also a problem.'
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