Flood-stricken Pakistan faces economic catastrophe
Pakistan faces economic catastrophe after the devastating floods that have wiped out farmland and ruined infrastructure, with feared losses of billions of dollars likely to set back growth by years.
The country’s worst-ever humanitarian disaster has ravaged an area roughly the size of England, affected 20-million people, exacerbated a crippling energy crisis and raised fears of social unrest.
“It seems we’re doomed to walking through a dark tunnel. We’re on an unending path of misery,” said Morio Pahore, a farmer from small town Thul in southern Pakistan who is now living in a tent on a highway.
Shirtless, his face burnt dark by the sun, the greying 50-year-old said he lost everything when the rains fell and the river burst its banks.
“We had goats and buffalo and a wooden hut. We had grain to eat. The river ate everything, leaving the whole family hungry and empty-handed.
“I don’t think we can start again for many years. Everything is under water and even if the river recedes, the water will be there for a long time.”
It is a tragedy repeated millions of times over for farmers and peasants across the country, who saw their livelihoods washed away in minutes after the floods first hit three weeks ago.
Agriculture accounts for 20% of Pakistan’s gross domestic product. President Asif Ali Zardari said it would take two years to provide farmers with crops, fertilisers, seeds and food. Experts say it will take far longer.
On top of that, floods have inflicted widespread damage on infrastructure. In cities, flood waters have destroyed electricity installations, roads and phone lines.
The World Bank, which has announced a $900-million loan for Pakistan, expects the economic impact to be huge, indicating that direct damage was greatest in housing, roads, irrigation and agriculture.
It estimated crop loss at $1-billion, saying the full impact on soil erosion and agriculture could only be assessed when the water recedes around mid-September.
“We have lost around 20% of our cotton crops. The destruction of corn, rice, sugar cane, vegetable crops and fish farms is enormous as well,” Ibrahim Mughal, who heads the independent Agri-Forum organisation, told Agence France-Presse.
Damage to cotton, rice, sugar cane and maize will hit the export sector, the main source for Pakistan’s forex reserves. Textiles and agriculture account for about three quarters of Pakistan’s $21-billion export target this year.
“The floods have eaten three million tons of cotton—over 20% of our 14-million bales for this year. It will negatively affect by 25% large-scale manufacturing and ultimately impact on exports,” Ashfaq Hasan Khan, a former government economic adviser, said.
There are fears that Pakistan risks running up a higher fiscal deficit, which would lead to increased government borrowing.
Before the floods, the country had a healthy forex reserve of $16,45-billion, thanks to an $11,3-billion IMF rescue package meant to stave off Pakistan’s worst balance of payment crisis and 30-year-high inflation in 2008.
After recording its lowest growth in a decade, GDP had been expected to grow by 4,5% in the fiscal year ending June 30 2011, but the floods could shave at least 1% off growth estimates.
“Our assessment suggests Pakistan could achieve about 3,5% GDP growth rate this fiscal year,” Khan said. “It means a loss of around $2-billion.”
Pakistan’s UN envoy in Geneva, Zamir Akram, has said reconstruction in northern areas alone could cost $2,5-billion.
‘The loss is huge’
Food prices are already rising and there are fuel shortages in some areas.
The director general of the Pakistan Electric Power Company, Muhammad Khalid, told AFP it faced losses of more than four billion rupees ($47-million) due to the floods with some grid stations wiped out.
About 1 000 villages in flood-hit districts of southern Punjab are without power, said Jamshaid Niazi, spokesperson for Multan Electricity Supply Company. “Our two grid stations are badly affected,” he said.
“The loss is huge. We have to install new poles, wires, feeders etc.”
Experts have urged the government—already weak and unpopular—to move quickly, warning that the losses could fan unemployment and social unrest.
“The peasants are our lifeline, so by not helping them we are in fact committing suicide,” Agri-Forum’s Mughal said.
“Jobless people can become criminals if they can’t get employment. In this case the number of such people is in the millions.”—AFP