September 5, 2023
Economy Pakistan

Iran warns Pakistan to impose an $18 Billion Penalty

Iran and Pakistan

Pakistan may soon face a penalty of $18 billion from Iran for its inability to complete construction on the Iran-Pakistan gas pipeline project. This project, which would bring gas from the South Pars gas field to Pakistan, was originally supposed to include India, but the country backed out due to security and tariff concerns. Despite signing a revised agreement with Iran in 2019, Pakistan has been unable to fulfill its commitment due to US sanctions.

Pakistan is currently undergoing an economic crisis with food and power shortages, high inflation, and a collapsing currency. The country is in dire need of a bailout to address its expanding debt, rising energy costs, depleted foreign reserves, political instability, and declining GDP growth leading to widespread job losses.

In some cities, the situation has become so dire that flour is being rationed and guarded due to skyrocketing prices. With the deadline for completion of the pipeline project approaching, Pakistan faces the difficult decision of either completing the construction or paying the hefty penalty.

In conclusion, Pakistan’s already troubled financial situation may worsen with the looming deadline for the gas pipeline project and the threat of a $18 billion penalty from Iran. The country desperately needs to address its economic crisis to find a way out of this predicament.

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