Where the import restrictions inflicted by the State Bank of Pakistan have shattered the local auto industry, the repercussions are spiraling out of control. As per the latest reports, the Lines of Credits (LCs) embargo may cause a petroleum shortage which in turn result in a fresh havoc in the country. Currently, Pakistan imports 87% of petroleum products and crude oil.
The State bank has informed oil refineries and Oil Marketing Companies that they are not lifting the curbs on importing petroleum products until December 6, 2022. Sources have informed that all Banks, including Meezan, HBL, Habib metro, etc., have directed the industry to wait till December 66 to open LCs.
Details have revealed that SBP has closed the LCs in a bid to preserve the depleting reserve of dollars. State Bank spokesperson has not reciprocated on the matter, but sources have made a revelation that the bank has not revealed any such intention – the bank has not braced itself for such indication.
The industry sources further added, “The LC for the import of chemicals critical for refinery operations is not being opened, and this situation may lead to reduction or suspension of the refineries’ operations, resulting in a shortage of POL products, particularly of Mogas (petrol). The central bank has informed us that no LC will be opened till December 6, 2022 — the date of payment of bond worth $1 billion.”
Closed LCs Pakistan Auto Industry
Indelicate handling of economic charts is hitting the economy hard. In a bid to control the depleting foreign reserves, SBP has closed LCs. The local auto industry falls among the affectees bearing the brunt of the import embargo. Since the inception of SBP restrictions, the automakers are announcing production cuts, price hikes, and booking suspensions. Adding more to the pain, there is no indication of translating when the state bank is opening the LCs.
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