Airlines struggle to repatriate dollars from crisis-hit Pakistan
The global airline industry body has warned that Pakistan has become “very challenging” to serve with flights as carriers struggle to repatriate dollars, adding to difficulties for foreign companies operating in the crisis-hit country. Pakistan is suffering from an escalating financial crisis, with perilously low levels of foreign reserves leading to shortages and rising prices of essential goods. Companies are contending with delays in importing or converting currency, and analysts have warned that the country is at risk of default. Air carriers, which sell tickets in local currency but need to repatriate dollars to pay for expenses such as fuel, have been hit particularly hard. The International Air Transport Association said $290mn of funds were stuck in the country as of January, the most recent data available, up nearly a third since December. Pakistan is holding the second-largest amount of foreign currency from airlines globally, after Nigeria. “Airlines are facing long delays before they are able to repatriate their funds,” said Philip Goh, the IATA’s Asia-Pacific head. “Some airlines still have funds stuck in Pakistan from sales in 2022.” Virgin Atlantic announced last month it was pulling out of Pakistan, just over two years since it launched services. The carrier had encountered problems repatriating funds, but the decision to suspend flights was based on the economics of the route, according to a person familiar with the decision. Goh said: “If conditions persist that make the economics of operation to a country unsustainable, one would expect airlines to put their valued aircraft assets to better use elsewhere.” Pakistan’s foreign reserves amount to about $4bn, enough to cover only one month’s worth of imports. While authorities had imposed strict import and currency controls, those measures were mostly lifted this year in an effort to revive a $7bn IMF bailout. Analysts and executives said there was a long backlog of dues to be cleared after the limits were eased, leading to hold-ups securing certificates to convert currency with local banks. Pakistani officials said banks had been paying airlines since currency restrictions were lifted, but there were also other pressing challenges such as financing food and medicine imports. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-03-16/general/airlines-struggle-to-repatriate-dollars-from-crisis-hit-pakistan
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Airlines struggle to repatriate dollars from crisis-hit Pakistan
The global airline industry body has warned that Pakistan has become “very challenging” to serve with flights as carriers struggle to repatriate dollars, adding to difficulties for foreign companies operating in the crisis-hit country. Pakistan is suffering from an escalating financial crisis, with perilously low levels of foreign reserves leading to shortages and rising prices of essential goods. Companies are contending with delays in importing or converting currency, and analysts have warned that the country is at risk of default. Air carriers, which sell tickets in local currency but need to repatriate dollars to pay for expenses such as fuel, have been hit particularly hard. The International Air Transport Association said $290mn of funds were stuck in the country as of January, the most recent data available, up nearly a third since December. Pakistan is holding the second-largest amount of foreign currency from airlines globally, after Nigeria. “Airlines are facing long delays before they are able to repatriate their funds,” said Philip Goh, the IATA’s Asia-Pacific head. “Some airlines still have funds stuck in Pakistan from sales in 2022.” Virgin Atlantic announced last month it was pulling out of Pakistan, just over two years since it launched services. The carrier had encountered problems repatriating funds, but the decision to suspend flights was based on the economics of the route, according to a person familiar with the decision. Goh said: “If conditions persist that make the economics of operation to a country unsustainable, one would expect airlines to put their valued aircraft assets to better use elsewhere.” Pakistan’s foreign reserves amount to about $4bn, enough to cover only one month’s worth of imports. While authorities had imposed strict import and currency controls, those measures were mostly lifted this year in an effort to revive a $7bn IMF bailout. Analysts and executives said there was a long backlog of dues to be cleared after the limits were eased, leading to hold-ups securing certificates to convert currency with local banks. Pakistani officials said banks had been paying airlines since currency restrictions were lifted, but there were also other pressing challenges such as financing food and medicine imports. <br/>
