Since mid-June, Pakistan’s unprecedented violent monsoon rainfall has caused devastating flooding. 72 of the 160 regions of the South Asian country have been flooded, one-third of the land has been flooded, 13,91 people have been killed, 33 million people have been affected, 500,000 people live in refugee camps and 1 million houses. , 162 bridges and nearly 3,500 kilometers of roads were damaged or destroyed…
On August 25, Pakistan officially declared a “state of emergency”. Because the affected people did not have shelter or mosquito nets, infectious diseases spread. At present, more than tens of thousands of cases of skin infection, diarrhoea and acute respiratory diseases are reported every day in Pakistani medical camps. And data show that Pakistan is likely to usher in another monsoon rainfall in September.
Floods in Pakistan have caused 7,000 containers to be trapped on the road between Karachi and Chaman on the southeastern Afghan border of Kandahar, but shipping companies have not exempted shippers and freight forwarders from demurrage fees (D&D), major shipping companies such as Yangming, Oriental Overseas and HMM, and other smaller ones. The shipping company has charged up to $14 million in demurrage fees.
Traders said that because they held unreturnable containers in their hands, each container was charged a fee ranging from $130 to $170 a day.
The economic losses caused by the floods to Pakistan are estimated to exceed $10 billion, which puts a heavy burden on its economic development. Standard & Poor’s, an international credit rating agency, has downgraded Pakistan’s long-term outlook to “negative”.
First of all, their foreign exchange reserves have dried up. As of August 5, the State Bank of Pakistan held foreign exchange reserves of $7,83 billion, the lowest level since October 2019, which is barely enough to pay for one month’s imports.
To make matters worse, the exchange rate of the Pakistani rupee against the US dollar has been falling since September 2. Data shared by the Pakistan Foreign Exchange Association (FAP) on Monday showed that as of 12 noon, the price of the Pakistani rupee was 229.9 rupees per US dollar, and the Pakistani rupee continued to weaken, falling 1.72 rupees, equivalent to a depreciation of 0.75 percent, in early trading in the interbank market.
The flood destroyed about 45% of local cotton production, which will further exacerbate Pakistan’s economic difficulties, because cotton is one of Pakistan’s most important cash crops, and the textile industry is the country’s largest source of foreign exchange earnings. Pakistan expects to spend $3 billion to import raw materials for the textile industry.
At this stage, Pakistan has severely restricted imports, and banks have stopped opening letters of credit for unnecessary imports.
On May 19, the Pakistani government announced a ban on the import of more than 30 non-essential goods and luxury goods in order to stabilise declining foreign exchange reserves and rising import bills.
On July 5, 2022, the Central Bank of Pakistan once again issued a foreign exchange control policy. For the import of some products to Pakistan, importers need to obtain the approval of the Central Bank in advance before they can pay foreign exchange. According to the latest regulations, whether the amount of foreign exchange payments exceeds $100,000 or not, the application limit must be applied for approval to the Central Bank of Pakistan in advance.
However, the problem has not been solved. Pakistani importers have turned to smuggling in Afghanistan and paid in US dollars in cash.
Some analysts believe that Pakistan, with severe inflation, soaring unemployment, urgent foreign exchange reserves and rapid depreciation of the rupee, is likely to follow the footsteps of Sri Lanka, which is economically collapsed.
During the Wenchuan earthquake in 2008, the Pakistani government took out all the tents in stock and sent them to the affected areas in China. Now Pakistan is in trouble. Our country has announced that it will provide 100 million yuan in emergency humanitarian assistance, including 25,000 tents, and then an additional assistance has reached 400 million yuan. The first 3,000 tents will arrive in the disaster area within a week and put into use. The 200 tons of onions urgently raised have passed through the Karakoram Highway. Delivery to the Pakistani side.
Post time: Sep-16-2022