Fresh trouble for Shehbaz Sharif: Pakistan fails to get cargoes to buy LNG; dollar crunch halts food imports

Pakistan's ongoing economic crisis is likely to further exacerbate as the dollar shortage has led to a complete halt in the import of food and beverages in the country. This situation has led to thousands of containers being stranded at ports, incurring fines and additional charges for the traders, India Today's DailyO reported on Tuesday.  

Commercial dealers across the country have been forced to suspend imports due to the unavailability of dollars, said Farhat Siddiqui, Secretary of Karachi's Wholesale Grocers Association Society. Banks have refused to provide them with the necessary foreign currency, the report said.

Pakistan's The News reported that the association held a meeting and decided that importers should inform their indenters that no shipment should be dispatched after June 25. Importers will only be responsible for the clearance of goods that have either arrived at the port or are en route and no shipments dispatched after June 25 will be cleared for entry, the society said.

A similar situation played out in January this year when thousands of containers packed with essential food items and medical equipment had been held up at Karachi Port as the country grappled with a dollar shortage.

If this situation persists, Pakistan may face a food shortage, pushing the already high prices further - a situation that may put Prime Minister Shehbaz Sharif in trouble. The country has already recorded the highest inflation in Asia, surpassing bankrupt Sri Lanka.  

Pakistan suffered another setback on Tuesday as did not get any cargoes to buy liquefied natural gas (LNG). The country on Tuesday made its first attempt in about a year to buy LNG from the spot market but no suppliers of the power-station fuel offered cargoes, according to Bloomberg. No companies responded to Pakistan LNG Limited's tender to purchase six shipments for October-to-December delivery, which closed on Tuesday.

Many overseas banks are not accepting letters of credit from Pakistani financial institutions to procure LNG shipments, making suppliers reluctant to offer cargoes, the report said.  

Pakistan has been running low on foreign currency, which is required to pay up all its external debts to stave off default as there is no signal yet on the $1.1 billion bailout package from the IMF. The cash-strapped nation tried to save dollars by restricting imports. That move, however, hit the industries, which struggled to import raw materials.

Just weeks ago, Indus Motors, the manufacturer of Totoya vehicles in Pakistan, halted its production due to a disruption in the company's supply chain. In a letter to Pakistan Stock Exchange, the company management said its vendors continued to face hurdles in the import of raw materials and receiving clearance of their consignments due to challenges in the opening of letters of credit and supply chain issues.

"This has disrupted the supply chain and the vendors are unable to supply raw materials and components to the company. It has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities," the letter said. Now, there are reports that Toyota might shut its operations and exit Pakistan completely.

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