Virendra Pandit
New Delhi: With galloping inflation and plummeting foreign exchange reserves repeatedly pounding the South Asian nation of 220 million, a Pakistani minister has urged the people to cut down on their daily consumption of tea by a “cup or two” as the country can no longer afford to import it.
It forced Pakistan to take loans to even import tea, the media reported, quoting Federal Minister for Planning and Development Ahsan Iqbal, on Tuesday.
Recently, the Shehbaz Sharif government had directed businesses to close shops by 8 PM daily to save on electricity consumption while the Islamic country faced its worst power cuts for hours daily, amid a heatwave. Even the prices of wheat flour and other essential commodities have skyrocketed.
Highlighting the soaring fuel prices, an airport official had sought permission to drive to work on a donkey cart as he could not afford to pay for petrol or diesel!
Pakistan is the world’s largest tea importer. In 2020, it imported tea worth USD 640 million (PRs. 13,000 crores). They may force it to curtail this import as the country is heading towards an unprecedented economic crisis, or even a default on sovereign debt, like Sri Lanka.
Iqbal told journalists that the Pakistanis should drink less tea to keep the economy afloat as the country is grappling with soaring inflation and a fast-depreciating rupee.
Pakistanis should reduce their tea consumption by “one or two cups” per day as imports are putting additional financial strain on the government, he said.
“We take a loan to import tea,” Iqbal said, adding businesses should also close earlier to save electricity.
Pakistan has been facing severe economic challenges for months, leading to an increase in the prices of food, cooking gas, and oil.
Islamabad’s foreign currency reserves are declining rapidly. Funds held by the central bank fell from USD 16.3 billion at the end of February to nearly USD 10 billion in May, an over USD 6 billion drop enough to cover the cost of two months of its imports, the media reported.
But the people have not taken kindly to Iqbal’s appeals. Many ridiculed him on social media, saying cutting tea consumption would do little to ease the country’s economic woes.
Even with the change of government, Pakistan’s economic woes persist.
Early this year, the economic crisis was the chief reason for a political showdown between Prime Minister Shehbaz Sharif and his predecessor Imran Khan, which led to the latter’s ouster in April. Sharif had accused Khan of economic mismanagement and mishandling of the country’s foreign policy, forcing Khan out of office in a no-confidence vote. The all-powerful Pakistani Army had first propped up the Imran Khan government in 2018 and then replaced it with the Sharif-led coalition government in 2022.
Now the boot is on the other foot. Khan is holding big rallies across Pakistan and accusing Sharif of price rises and inflation.
Coming to terms with the mounting economic crisis is now the biggest challenge for Sharif’s government.
Last month, Pakistan banned the import of non-essential and luxury items to “control spiraling inflation, stabilize foreign exchange reserves, strengthen the economy, and reduce the country’s reliance on imports,” Information Minister Marriyum Aurangzeb had said on May 19.
Sharif had said the decision “will save the country’s precious foreign exchange” and that Pakistan has to “practice austerity.”
In May-end, the government lifted a cap on fuel prices — a condition for a long-stalled bailout deal with the International Monetary Fund (IMF) to go ahead.
Last week, the government unveiled a fresh USD 47 billion budget for 2022-23 to convince the IMF to restart the USD 6 billion bailout deal.