Pakistan’s auto assembler Honda Atlas Cars (Pakistan) Limited (HCAR) on Friday said its plant, which has been shut since the start of March, will remain closed until April 15 due to supply chain disruptions.
The company announced its decision in a notice to the Pakistan Stock Exchange (PSX).
The company’s supply chain has also been severely disrupted by these measures, according to the notice. “Further to our letter dated March 08, 2023 and considering the current economic situation of Pakistan whereby the Government resorted to stringent measures including restricting the opening of LCs (Letters of Credit) for import of CKD (Completely Knocked Down) kits, raw materials, and halting foreign payments,” it stated.
“As a result, the company is not in a position to continue with its production and ultimately has continued to shut down its plant from April 01, 2023 to April 15, 2023.”
The Honda Motor Co. Ltd. subsidiary HCAR announced earlier this month that its factory would be closed from March 9 to March 31.
Indus Motor Company Limited and Pak Suzuki Motor Company were among the automakers forced to halt production recently as a result of economic problems that caused the central bank’s foreign exchange reserves to fall to a level barely sufficient to cover four weeks of imports and forced the government to impose import restrictions. Pakistan’s auto sector is still beset by crises.
To fulfill its obligations for imports and other foreign payments, the nation still lacks the critical amount of dollars. According to information released on Thursday, the State Bank of Pakistan’s (SBP) foreign currency holdings decreased by $354 million as of March 24, coming in at $4.2 billion.
After six consecutive weeks of gains, this week sees the first weekly decrease in central bank-held reserves. Around one month’s worth of import cover puts the total amount at a critical level.
The government is still working hard to persuade the IMF to restart the Extended Fund Facility (EFF) program, which, if authorized by its board, would release a funding tranche of more than $1 billion.