ISLAMABAD: Pakistan’s central bank on Monday asked banks to extend the payment term of importers as tens of thousands of containers remain stuck at ports as forex reserves held by the central bank run out.
Amid a growing economic crisis in Pakistan, the biggest worries center around the country’s ability to pay for imports such as energy and food and to meet sovereign debt obligations abroad. Foreign exchange reserves with the central bank currently stand at just $4.3 billion, barely enough to cover a month’s imports, compelling the government to restrict the import of goods, including industrial raw materials, to stop dollar outflows.
The low reserves have compelled the government to restrict the import of goods, including industrial raw materials, to stop dollar outflows, whereas commercial banks have stopped issuing letters of credit (LCs), leaving importers struggling to arrange the greenback for already placed orders.
The Karachi Chamber of Commerce and Industry has said more than 7,500 containers of imports are stuck at ports, with industries facing an acute shortage of raw materials.
On Monday, the SBP said it had given general guidance to banks to prioritize the import of essential items like food, pharmaceutical and energy.
“[The] SBP has advised banks to provide a one-time facilitation to all those importers who could either extend their payment terms to 180 days (or beyond) or arrange funds from abroad to settle their pending import payments,” the Pakistani central bank said in a statement
“Accordingly, till March 31, 2023, banks have been advised to process and release documents of shipments/goods that have already arrived at a port in Pakistan or have been shipped on or before January 18, 2023,” the statement read.
The SBP also urged commercial banks to educate customers and inform them prior to the initiation of import transactions to avoid any complications in the future.