ISLAMABAD: The recent cataclysmic floods that have ravaged Pakistan may have caused over $40 billion in economic losses and damages, according to an initial assessment.
The new number is even far higher than the $30 billion figure given by United Nations Secretary-General Antonio Guterres who was in the country on a solidarity visit last week.
The figure of $40 billion losses was flagged in a flood response centre meeting of the National Flood Response Coordination Centre (NFRCC) on Monday where the Ministry of Finance presented an assessment report titled “ An Early Assessment of Flood Impact on Pakistan’s Economy”, The Express Tribune reported on Tuesday.
The finance ministry’s initial assessment report showed that economic losses were around $18 billion.
Planning Minister and Chairman of NFRCC, 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 going through the process of a comprehensive assessment of flood damages with the help of World Bank, Asian Development Bank, provincial and federal governments,” said Iqbal.
The planning minister said that the finance ministry had presented an initial assessment of flood losses, which was based on predictive analysis but the model’s outcome would depend on what input was fed into it.
“NFRCC has directed the Ministry of Finance to withhold the release of its flood impact report,” he added.
“We will wait for the outcome of comprehensive assessment but damages are colossal and even more than $30 billion as suggested by the United Nations secretary general,” said the NFRCC chairman.
Pakistan’s GDP is also dwindling for the financial year 2022-2023 and is likely to drop from three per cent to five per cent, according to government estimates. Before the floods, the Ministry of Finance had targeted 5 per cent economic growth.
The IMF will consider any relaxation in Pakistan’s $6.5 billion bailout programme on the basis of a credible assessment of losses.
Over 33 million people have been affected by the floods who immediately require assistance, far more than the initial Rs 25,000 cash handout.
If losses increase to $40 billion, it means GDP growth this year can turn negative and inflation may cross 30 per cent due to the complete breakdown of the supply chain, according to an official of the finance ministry, who was involved in the preparation of the initial assessment report.
The preliminary report showed that the overall loss in GDP growth would be 3.3 per cent to 3.7 per cent due to the floods.
But if the losses are revised upwards to $40 billion, the economy will contract, according to the sources. The interim report showed that about 20 per cent of the Public Sector Development Program (PSDP), or Rs 218 billion, would have to be diverted towards disaster relief expenditure, resulting in additional unemployment of 600,000 due to low spending.
In the interim report, the finance ministry reduced the negative impact on the trade deficit due to the floods from the initial $4 billion to $2 billion.
It did not give a figure for the additional impact on the current account deficit, despite earlier giving figures of $4 billion to $5 billion.
“Flood damages to crops, livestock, infrastructure and the expected slowdown in economic activities will have implications for the external sector,” read the report without giving a number.
The Ministry of Finance report states that the devastating flood has disproportionately affected the poor and vulnerable segment of society.
The declining GDP growth and other losses to the economy would further exacerbate the poverty situation in the country, pushing around 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 per cent.
The country is expected to get major support from the developed nations during the upcoming UN Climate Change Conference, COP27, scheduled to take place in Egypt in November.