By
Bloomberg
Published
October 30, 2024
Pakistan's smaller textile companies are cutting production or selling assets to pay off debts after high energy and borrowing costs hit the companies.
Ghazi Fabrics International Ltd. on Tuesday said it would partially reduce production at its weaving unit due to prevailing economic conditions, rising cost of electricity and non-availability of quality cotton at an affordable price. Nazir Cotton Mills Ltd. has decided to sell obsolete machinery to pay off its debt, the company said in a separate filing to the Pakistan Stock Exchange.
Prime Minister Shehbaz Sharif's government has increased energy prices to meet conditions set by the International Monetary Fund for the current $7 billion loan programme. Now, for some, electricity prices are higher than house rents.
The country's economy grew 3.1% in the year that ended in July, but the industrial sector contracted. Business owners and consumers have protested high costs across the country in recent months.
Consistently high inflation negatively affected the purchasing power of consumers, resulting in loss of business, Bata Pakistan Ltd. said in its quarterly report. The company's quarterly net income fell to the lowest level in nearly two years, according to data compiled by Bloomberg. Nazir Cotton's losses nearly doubled in the quarter ended September.
