Pak’s economic loss from massive flooding could top $40bn: FM
The recent cataclysmic floods that ravaged Pakistan may have caused more than $40 billion in economic loss and damage, according to an initial assessment.
The new figure is even much higher than the $30 billion figure given by United Nations Secretary-General Antonio Guterres, who was in the country for a solidarity visit last week.
The $40 billion loss figure was reported at a meeting of the National Flood Response Coordination Center (NFRCC) flood response center on Monday, where the Department of Finance presented an assessment report titled An Early Assessment of Flood Impact on Pakistan’s Economy, The Express Tribune reported on Tuesday.
The Ministry of Finance’s initial assessment report showed economic losses amounted to approximately $18 billion.
Planning Minister and NFRCC Chairman Ahsan Iqbal said: “The devastating conditions suggest that the scale of flood losses is in the range of $30 billion to over $40 billion.
We are in the process of carrying out a full flood damage assessment with the help of the World Bank, Asian Development Bank, provincial and federal governments, Iqbal said.
The planning minister said the finance ministry had presented an initial assessment of flood losses, which was based on predictive analysis, but the outcome of the model would depend on the data fed into it.
The NFRCC ordered the Ministry of Finance to suspend the publication of its flood impact report, it added.
We will await the results of a full assessment, but the damage is colossal and even exceeds $30 billion, as suggested by the UN Secretary General, the NFRCC Chairman said.
Pakistan’s GDP is also shrinking for the financial year 2022-2023 and is expected to decline by 3% to 5%, according to government estimates. Before the floods, the Ministry of Finance was aiming for economic growth of 5%.
The IMF will consider any easing of Pakistan’s $6.5 billion bailout package based on a credible assessment of losses.
More than 33 million people have been affected by the floods who are in immediate need of assistance, far more than the initial cash payment of Rs 25,000.
If losses increase to $40 billion, it means GDP growth this year may turn negative and inflation may cross 30% due to complete supply chain collapse, ministry official says of Finance, who participated in the preparation of the initial appraisal report.
The preliminary report showed that the overall loss in GDP growth would be 3.3% to 3.7% due to the floods.
But if the losses are revised up to $40 billion, the economy will shrink, the sources say. The interim report showed that around 20% of the Public Sector Development Program (PSDP) or Rs 218 billion is expected to be diverted to disaster relief expenditure, resulting in additional unemployment of 600,000 low spending.
In the interim report, the Ministry of Finance reduced the negative impact on the trade deficit due to the floods from the initial USD 4 billion to USD 2 billion.
He did not give a figure for the additional impact on the current account deficit, although he previously gave figures of $4 billion to $5 billion.
Flood damage to crops, livestock, infrastructure and the expected slowdown in economic activities will have implications for the external sector, the report reads without giving a figure.
The Ministry of Finance report says the devastating flood has disproportionately affected the poor and vulnerable segment of society.
Lower GDP growth and other losses to the economy would further worsen the poverty situation in the country, pushing an estimated 9-12 million more people into poverty, according to The Express Tribune.
Pakistan is a victim of global warming, although its contribution is less than 1%.
The country is expected to gain strong support from developed countries at the upcoming United Nations Climate Change Conference, COP27, which is due to take place in Egypt in November.
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