Pakistan deals with a financial crisis; seeks help from IMF

Key takeaways:

• People line up to buy food at government-controlled costs in Islamabad as there are fears that the financial crisis will increase. 

Pakistan is having last-ditch chats with the International Monetary Fund (IMF) to ensure help to prevent a deepening financial crisis that has all but drained its foreign exchange reserves.

Pakistan is in a deep financial crisis, and it could get worse: 

It has sufficient dollars to cover less than a month of imports at average levels and needs help to service sky-high levels of foreign deficit.

An IMF unit is due to leave the nation on Thursday after ten days of discussions with the government seeking to unlock crucial international funds.

In January, annual inflation skyrocketed to over 27%, the highest in Pakistan since 1975, and there are increasing worries for the economy in a critical election year.

During the financial crisis, the Pakistan rupee sank, and the lack of foreign currencies: 

This week the rupee fell to a historic low of 275 to the dollar, down from 175 a year back, making it more pricey for Pakistan to buy and settle for things.

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The lack of foreign money is one of the most pressing of Pakistan’s issues.

Factories like Jubilee Textiles in Faisalabad, the industrial heartland of Pakistan, was closed recently – not by the regular power cuts that have dogged Pakistan for years, but because they needed more money to pay for the things they needed.

“If we can’t import, how can we produce? We’ve already made a loss,” its director Fahim told the press, adding that all its 300 employees had been sent home.

Jubilee’s printing machines have only just resumed after closing down last month. 

Loads of white cotton sheets sat in iron tubs, surrounded by a light coat of brick dust; when the media visited, the only sound was the drip, drip of an industrial washer.