Khalid Siraj Textile Mills Limited (KSTM) on Monday announced it will extend the shutdown of operations until May 31, citing issues ranging from the high cost of doing business to import restrictions as the ongoing economic crisis in Pakistan continues to take a toll on industries.
The yarn manufacturer informed the Pakistan Stock Exchange of the information in a notice. (PSX).
Take note that the situation is becoming worse as a result of ongoing instability in politics, import restrictions, and an unchecked dollar surge in our letter from 10/2/2023. These reasons have weakened the currency, pushed up cotton prices, raised the price per unit of power, and, most crucially, damaged corporate confidence, according to the notice.
“The mill management of the company has decided to close the mill operations until May 31, 2023,” it added.
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In February, KSTM announced it will cease operations until March 31 due to problems of a similar nature.
The development occurs at a time when Pakistan’s economy is in poor condition and is struggling to pay its high levels of external debt in the midst of political unrest and deteriorating security. Pakistan is also experiencing a balance-of-payments crisis.
Meanwhile, the country continues to have a US currency shortage, the rupee has weakened, and inflation has surged. This has left little room for imports, which has led to a sharp reduction in the industry.
In an effort to appease the International Monetary Fund (IMF), the State Bank of Pakistan (SBP) announced the removal of the Cash Margin Requirement (CMR) on Friday.
Analysts reported that the decision was made to restart the IMF’s Extended Fund Facility (EFF) programme and receive the $1.2 billion loan tranche. Additionally, analysts stated that the elimination of cash margin will support the ease of doing business in Pakistan since many companies were experiencing a shortage of raw materials as a result of the application of cash margin limitations.
