As per figures issued on Wednesday by the statistics bureau, inflation has reached a 48-year high in crisis-stricken Pakistan, where the International Monetary Fund is visiting for urgent meetings.
With thousands of import containers being held up at Karachi port, year-over-year inflation in January 2023 was recorded at 27.55 percent, the highest level since May 1975.
Pakistan’s economy is in shambles as it struggles to pay off massive amounts of external debt while dealing with a balance of payments problem.
Less than $3.7 billion, or just three weeks’ worth of imports, is held in the state bank of the country with the fifth-largest population in the world.
An IMF delegation arrived in Islamabad on Tuesday to restart talks with the government about a stalled rescue plan. The government has so far refused to agree to the strict requirements of the international lender.
However, Islamabad has begun to yield to pressure in recent days as the threat of national insolvency grows and no friendly nations are willing to offer less painful bailouts.
To manage a rogue illicit market in US dollars, the government relaxed regulations on the rupee, which led to the currency falling to historic lows. Additionally, artificially low fuel costs have increased.
There is a backlog of thousands of cargo containers at Karachi port filled with merchandise the country cannot pay because the state bank no longer issues letters of credit, except those for necessary items like food and medication.
The ban on imports and the significant depreciation of the currency has severely hurt businesses. Domestic investment has stalled, public construction projects have been put on hold, and textile mills have partially shut down.
According to data released on Wednesday, the National Consumer Price Index for January 2023 increased by 2.88 percent from the prior month.