Traditional chai being served in Pakistan.
Pakistanis reacted with incredulity in early June when a top government official appeared to link the nation’s mounting financial crisis to excessive tea consumption.
Beset by huge trade and current account deficits, steep depreciation of the rupee, and double-digit inflation, Pakistan has sought to ward off default on sovereign debt payments by negotiating with the International Monetary Fund to continue a $6 billion bailout program begun in 2019.
As foreign reserves fell below $9 billion — only enough for 45 days of imported goods — planning minister Ahsan Iqbal resorted to urging fellow citizens to sacrifice by cutting back on their daily cups of chai.
“I appeal to the people to reduce their tea drinking by one or two cups a day because we also borrow money for the tea, which is imported,” he said.
This met with reactions like that of Jan Mohammad, a 45-year-old taxi driver. “Why should we reduce the use of tea? We drink at our own expense. We don’t drink with government money,” he told Dawn, a Karachi-based newspaper. Mohammad reportedly drinks 15 to 20 cups a day, well above the per-capita average of three cups, despite a 27% rise in tea prices over the past 12 months.
To be sure, tea lovers like Mohammad have made Pakistan the world’s leading importer of tea. Its inbound tea shipments rose above $593 million in 2021, almost twice the amount imported by the United Kingdom. The incoming tide of tea has helped drive Pakistan’s trade deficit beyond $43 billion.
After the country’s new prime minister, Shahbaz Sharif, took office in April, he vowed to tackle the economy’s challenges. The government owes $129 billion to foreign banks and has a budget deficit of 8.6%. The IMF bailout is forcing planners to reduce the budget deficit to 4.9% of GDP. Such draconian austerity is likely, however, to require sacrifices steeper than drinking less tea.