Fahad Ali is worried about the harrowing consequences of the floods
Floods Putting Pressure On Pakistan the unprecedented and devastating floods have wreaked havoc and now the real horrors of this tragedy are unfolding. This devastation has badly battered Pakistan and its entire socio-economic fabric. The already halting economy has taken a severe battering and the people are struggling to cope with the widespread devastation. The flooding has affected over 33 million people — some 15% of Pakistan’s population and has submerged a third of the country. The deaths are now calculated in thousands and the rains have caused damage worth billions of dollars, compounding the woes of an economy already beset by a raft of problems, ranging from a heavy debt burden and ballooning current account deficit to a tumbling currency and skyrocketing inflation, particularly food prices.
The rains have damaged vast areas where agricultural crops were at the point of ripening creating a shortage of edibles. Parts of Pakistan are still cut off from the rest of the country as flooding rendered roads and bridges inaccessible — crucially, this included areas in the nation’s southern breadbasket, and consequently the prices of edibles skyrocketing particularly onions whose price has gone up by more than fivefold. The price of tomatoes — another essential ingredient in Pakistani cuisine — also soared following the destruction of most of the crop. It was reported that crops like cotton, rice, and tomatoes have been seriously damaged. The damage to the agriculture sector is likely to widen Pakistan’s trade deficit from the current 2.4% of GDP to more than 3.5%, as the country is forced to import more foodstuffs and other goods from abroad.
Pakistan will import more tomatoes, rice, wheat, cotton, and other food items and provide them to people at higher prices which will make life even more difficult for the common people. Understandably, there will be more inflation in the coming days because of the destruction of agriculture if industrial raw materials are not imported then manufacturing would be hit and if they are imported the import bill will rise exponentially. It is reported that Pakistani officialdom is contemplating requesting the western countries to waive off Pakistan’s debts and help. In this context, it is pointed out that after all, it is the obsession of the western world with growth that has destroyed the environment, punishing countries like Pakistan, which contributes very little to carbon emissions.
At the beginning of the current financial year the government set a 5% growth target for this year, while the International Monetary Fund forecast that the economy would expand by 3.5% but after the disastrous floods, many expect zero growth this year. Pakistan’s foreign exchange reserves currently stand at about $8.6 billion, only enough for about a month of imports. The year-end target was to increase the buffer by up to 2.2 months. In a desperate situation, Pakistan was finally able to bring an IMF program back on track after months of delay mostly due to tough policy decisions. It is mentioned that Pakistan will likely have to increase its borrowing in the coming months to service its foreign debts and finance essential imports. The country already needs a total of $33.5 billion in the year through June 2023 and its next big payment — $1 billion in international bonds — is due in December.
Floods Putting Pressure On Pakistan
Many analysts point out that funds from bodies like the IMF to service the debt will come with strings attached, like conditions to increase electricity prices, impose additional taxes or cut fuel subsidies. Such measures will raise the cost of doing business, affecting manufacturing and growth. With the political uncertainty looming large, the country is not likely to attract foreign and local investment. It is mentioned that the path to stability was narrow, given the challenging environment and it has become narrower still and it will take an excruciatingly long time to come back to normal. It is acknowledged by official circles that global markets were jittery about Pakistan, given the economy’s massive losses after the floods and it will take a good deal of convincing to secure further financial assistance. It is widely known however that credit default risk has gone up and Pakistani bond prices have fallen.
The most damaging scenario faced by the country pertains to homes, roads, railways, crops, livestock, and livelihoods that have been washed away in extreme weather events. With agriculture making up nearly a quarter of Pakistan’s economy, officials now say the unprecedented floods may have cost up to $40 billion. Across the country, an estimated 800,000 cattle – a key source of income for rural families – have been lost in the floods. Farmers who have not had their crops and livestock washed away are now reportedly running low on feed for their cattle. Pakistan is the world’s fourth largest rice exporter, with markets in Africa and China but now the situation is precarious. Wheat is the staple food but with so much agricultural land damaged, the wheat harvest could be at risk too. Pakistan’s inflation rate was more than 24% before the floods and some costs have climbed by 500%. Authorities may need to import food to feed people and raw materials for the industry but the country’s foreign reserves were running low even before the crisis.
Sindh, where floodwaters descending from the country’s north and hill torrents from Balochistan have converged to give rise to a health crisis, has seen thousands displaced by deluges and now being inflicted by various diseases, mainly water-borne. With Pakistan’s already weak health system and lack of support, displaced families have complained of being forced to drink and cook with disease-ridden water. Health department data show that over 2.7 million internally displaced persons have been treated for water-borne diseases in the province since 1 July while 1,082 health facilities have been damaged by floods. The water level had reduced in Kotri Barrage, while the teams of the irrigation department were also working on de-watering water elsewhere, however, it might take months to completely drain the water.
There are efforts going in for providing relief to the flood-affectees and it is reported that a campaign would be launched for collecting two million packets of food for women and children affected by floods. This campaign will be carried out in collaboration with university students as it is reportedly mentioned that two-thirds of the country has to support one-third of the population. In the meanwhile, Pakistan is receiving foreign assistance from all over the world with aid coming through air, sea, and land. Pakistan received the first consignment of aid from Russia consisting of relief goods such as flood items, tents, and water-cleaning devices. Separately, the first flight of relief goods from Greece landed in the metropolis as well.
Japan has stated that it will extend the emergency grant aid of $7 million to Pakistan in response to the damages caused by the flood disaster. This Emergency Grand Aid will allow the implementation of humanitarian assistance activities for those seriously affected by the flood disaster in different parts of Pakistan through multiple international organizations in areas such as food, shelter, and non-food items, health and medical care, as well as water and sanitation. Japan reaffirmed its commitment to support Pakistan by mentioning that Japan considered it critical to extend its best support and stand available to the affected. The Weekender