Record food, energy imports pose challenge to Pakistan’s balance of payments

This photo shows a general view of Gwadar port in Gwadar, Pakistan on October 4, 2017. (REUTERS)
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Updated 20 September 2021
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Record food, energy imports pose challenge to Pakistan’s balance of payments

  • Pakistan’s energy and food import bills increased by 102 percent and 50 percent respectively in July-August 
  • Analysts forecast CAD will exceed 3 percent of Pakistan’s GDP by the end of current fiscal year 

KARACHI: Swelling energy and food import bills are posing a challenge to Pakistan’s balance of payments, experts say, as the country’s current account deficit may reach unsustainable levels by the end of the ongoing fiscal year.

Pakistan’s imports in the first two months of the current fiscal year 2021-22 grew by 74 percent to $12.2 billion, compared with the same period last year. The main contributors to the growth were energy and food, whose import bills have increased by 102 percent and 50 percent respectively. 
During July-August, the South Asian nation imported petroleum goods worth $3 billion and food worth $1.5 billion, mainly wheat and sugar.
The growth in imports has widened the country’s current account deficit during July-August to $2.29 billion, as compared with $838 million in the same period last year. 

“Tt shows that the economy is consuming more than producing,” Samiullah Tariq, head of research at Pakistan Kuwait Investment (PKI), told Arab News on Sunday. “The CAD more than 3 percent of GDP will not be sustainable.”

While the central bank attributes the rise in CAD to increasing global commodity prices and Pakistan’s economic recovery, analysts forecast it will cross the 3 percent mark by the end of the current fiscal year.
“We expect CAD to clock-in at $10 billion to $11 billion in FY22,” Tahir Abbas, head of research at Arif Habib Limited, said. “Any further uptick in the overall food and energy import will only put further pressure on the external account.”

To arrest the rise in CAD, Tariq added, Pakistan should increase production.

“Pakistan needs to increase production from agriculture and industrial sectors, substitute imports and curtail non-essential consumption/imports like automobiles etc.,” he said.

But Arif Nadeem, chief executive of Pakistan Agriculture Coalition (PAC), a body that works for the transformation of the agriculture sector, says agricultural production is already high.

“Pakistan has produced bumper wheat crop, highest ever, this year and there is no shortage of the sugar as well in the country,” he told Arab News. “Pakistan is also beefing up stocks of the commodities as other countries did in wake of lockdowns imposed after the coronavirus pandemic to avoid inflation.”

He said rising commodity prices in the international market were responsible for the high food import bills and to address the country’s food security farmers should be offered better prices for their produce.

“If international prices are given to our farmers they will work more,” Nadeem said, “(they will) use good quality fertilizers and seeds, resultantly produce more wheat, oil seeds, sugarcane, and cotton.”


In Karachi, a café where Ramadan means feeding anyone who arrives hungry

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In Karachi, a café where Ramadan means feeding anyone who arrives hungry

  • Karachi’s Cafe Mehmood has offered free meals to the needy for nearly four decades
  • Restaurant owners say paying customers and charity diners receive the same quality food

KARACHI: As the call to Maghrib prayer echoes through Karachi’s Sindhi Muslim Housing Society, long rows of people seated along a busy roadside begin to break their fast. Plates of fruit, samosas and glasses of the rose-flavored drink Rooh Afza move down the line as men, women and children share the evening meal after a long day of fasting in the city’s humid heat.

The gathering is a familiar Ramadan scene outside Cafe Mehmood, a modest restaurant in Pakistan’s largest city that has quietly sustained one of Karachi’s longest-running traditions of feeding the hungry.

Operating since the 1980s, the eatery is well known not only for its food but for a daily dastarkhwan, a communal meal spread laid out for anyone who arrives hungry. Donations collected from visitors and well-wishers help fund the initiative, allowing the restaurant to provide meals throughout the year to people who cannot afford to pay.

The tradition reflects a wider culture of charitable food distribution in Pakistan, particularly during Ramadan, when mosques, community groups and businesses organize iftar meals for fasting Muslims. In Karachi, a sprawling city of more than 20 million people, such initiatives often fill gaps in a fragile social safety net.

“Around 12,000 people come to this dastarkhwan daily and derive benefit from it,” said Imran Khan, the eldest son of one of the restaurant’s founders.

Pakistan, a country of more than 240 million people, has struggled with rising living costs in recent years following economic turmoil marked by inflation, currency depreciation and higher energy prices. For many families dependent on daily wages or informal employment, free community meals can provide an essential lifeline.

Cafe Mehmood’s story began in 1985, when three brothers opened the restaurant and named it after one of them, Mehmood. The charitable meals started modestly when the founders began serving food to a handful of people sitting on the footpath outside the restaurant.

Over time, word spread and more people began arriving. Donations from visitors and well-wishers helped expand the effort into a large-scale operation feeding thousands each day.

Communal meal spreads are common across Karachi, particularly during Ramadan, but the scale and schedule of the dastarkhwan outside Cafe Mehmood sets it apart.

“There are no specific [meal] timings,” Khan said. “It starts at seven in the morning and runs until 12 at midnight. During that period if anyone comes empty stomach, they are fed well.”

During Ramadan, however, the restaurant focuses its efforts on iftar and the meals that continue until the pre-dawn suhoor.

The service runs throughout the year, pausing only on three days annually: Eid Al-Fitr and the first two days of Eid Al-Adha. 

According to Khan, the restaurant prepares iftar for around 2,000 to 2,500 people each day, followed by dinner for roughly the same number.

To manage the demand, Cafe Mehmood operates a separate kitchen dedicated to preparing food for the charity meals. Inside the restaurant, customers who pay for their meals sit at tables, while outside, those who cannot afford to pay are served at long communal spreads laid out on the street.

Yet the owners say the difference is only in where the food is served, not in its quality.

“We make sure there is no compromise on quality while the taste, hygiene and service is similar to what we offer to our customers,” said Ismail Saeed, one of the founders’ grandsons who joined the family business five years ago.

Today, the restaurant and its charitable kitchen are run by the next generation: six members of the founding families and their nine sons.

Saeed said he had long wanted to take part in continuing the tradition.

“It has been a part of our genes since the beginning to help the needy, not just in terms of food but otherwise as well,” he said.

“We were provided with a platform through which we could do it, so I was always very keen about it.”

The charity meals are sustained through a combination of restaurant contributions and public donations. Visitors frequently stop by to give cash, while others transfer money online after learning about the initiative.

For those who cannot attend the communal meal spreads in person, the restaurant also distributes food parcels, particularly to women and people registered as deserving beneficiaries.

A typical meal served through the charity program includes chicken or beef gravy with two flatbreads, costing around Rs110 (about $0.39) per serving.

Despite its popularity, Cafe Mehmood historically avoided promoting its charitable work. For the family that runs the joint, the goal has remained simple: that no one who comes to their door leaves hungry.

“It was also the need of the hour,” Saeed said.