Amid an escalating economic crisis, the world’s largest tea importer is tackling rising inflation and a fast-depreciating rupee. Pakistan’s government is trying to manage its foreign currency savings carefully. With an official inflation rate of 13.8% this May – 17.3% for food prices –, the nation has now called for its citizens to reduce tea intake.
“I appeal to the nation to cut down the consumption of tea by one to two cups because we import tea on loan,” says Ahsan Iqbal, federal minister for planning, development and special incentives of Pakistan, in a press statement.
According to data from The Observatory of Economic Complexity (OEC), Pakistan is the world’s largest importer of tea, spending US$646 million on this commodity annually, compared to the UK’s US$330 million expenditure.
Protecting the dwindling foreign currency reserves is an expanding trend for net importer countries in a generalized inflationist environment. Vietnam and Thailand are examples of countries that directly admit that they are trying to increase their bargaining power by increasing the prices of their food exports.
Back in Pakistan, Iqbal also proposed closing market stalls by 20:30 to save on electricity costs.
Don’t consume this
Shortages, surging prices, protectionism and foreign currency capturing moves are leading some countries to plead to their citizens not to eat certain products.
In Uganda, President Yoweri Museveni told his citizens not to eat bread due to the sky-high prices of wheat imports due to the war in Ukraine.
“If there’s no wheat or bread, eat cassava. You’re complaining that there’s no bread or wheat: eat cassava. I don’t eat bread myself,” said the leader.
Furthermore, in Pakistan, Iqbal said that importing billions of dollars of edible oil was crippling the economy.
A UN report revealed that the price increases of certain products, such as cooking oils, will reduce the nation’s population purchasing power by a third, making nine in ten Pakistanis unable to afford a healthy diet.
The Sri Lanka route?
According to the country’s central bank, foreign exchange reserves from Pakistan dropped to under US$10 billion in the first month of June, down from US$16.3 billion in February.
The country, which is currently trying to unlock a bailout deal with the International Monetary Fund, might have to walk a similar path to Sri Lanka, which ran out of foreign currency.
When that happened, the country was forced to rely on domestic food production and humanitarian aid, mainly from India.
Sri Lanka is now urging farmers to boost rice production to solve its food crisis, with the country expecting severe food shortages to occur as soon as this August.
To avoid this scenario, Pakistan is trying to reduce exports, with a ban in May on the import of luxury items.
“My decision to ban the import of luxury items will save the country precious foreign exchange. We will practice austerity,” said Prime Minister Shehbaz Sharif.
