Economy loss due to floods estimated to be up to $12.5bn

ISLAMABAD: The government has estimated that the economy suffered a loss of $10 billion to $12.5 billion in the floods. Inflation is projected to go up in the range of 24 to 27 percent on an touch 30 percent for the current fiscal.

A high-powered committee comprising representatives of the Ministry of Finance, Ministry of Planning, State Bank of Pakistan, FBR, PIDE and others assessed that the poverty and unemployment have gone up manifold, as the prevalence of poverty increased from 21.9 percent to over 36 percent. Some 37 percent population was living in poverty after facing severe floods in 118 districts of the country.

Unemployment has gone up significantly but the government has decided to share any number after holding consultations with relevant stakeholders. The unemployment rate stood at six percent prior to the recent severe floods. Official sources said that the GDP growth would be reduced from five percent to two percent for the current fiscal. The State Bank of Pakistan revealed that the growth would be reduced from four to 4.5 percent to two percent for the current fiscal.

The agriculture growth faced much severe impact in the aftermath of floods and the value addition of agro growth in the range of over Rs500 billion might be evaporated in the current fiscal year. The agriculture growth target and services sector faced severe impacts.

The country’s GDP growth has been projected to evaporate by three percent and it will be hovering around two percent of GDP against the initially envisaged growth rate target of five percent on the eve of the budget for 2022-23.

The acute losses on the economic front may aggravate as the SBP’s model is estimated to ascertain losses on the basis of disrupted economic activities hit in all districts and tehsils in the flood-affected areas. The SBP has been using satellite images of SUPARCO to assess the exact losses faced by the agriculture sector. Google has also offered the government to get its services to ascertain the total accumulated losses to agriculture and physical infrastructure.

The last flood that had hit the country in 2010 had caused damages in 78 districts but the ferocity of recent floods could be gauged from the fact that it had caused damages in 118 districts of those areas, which are major hubs of economic activities.

Minister of State for Finance Aisha Ghaus Pasha, when contacted, said that the government had made the latest projections but these would be shared with the relevant stakeholders before making them public.

She told a group of reporters that the initial assessment was underway and it would be firmed up soon after which it would be made public. She said that the assessment of damages on the economic front would be shared with donors. The government has also directed the authorities concerned to come up with the projection of assessment about possible increase in non-performing loans (NPLs), she said.

“The government has envisaged agriculture growth target of 3.9 percent for the current fiscal year. The initial assessment shows that the agriculture growth would face a loss of 1.8 percent and it will be standing at two percent of the GDP. The services sector will face a loss of two percent of GDP and will be standing at 3.1 percent for the current fiscal year.”