| Home > South-Asia >> Pakistan | |
Pakistan economy to suffer prolonged flood damage
Reuters - September 1, 2010
Michael Georgy, Islamabad – Floods have ravaged Pakistan's economy, the prime minister said on Wednesday, with massive job losses and soaring inflation expected to hurt a nation whose stability is vital to the US war against militancy.
Briefing the cabinet on the worst floods to hit Pakistan in over 80 years, Prime Minister Yusuf Raza Gilani also expressed concerns over food security due to the prolonged damage to agriculture and said the social impact of the disaster on his impoverished country was "serious."
"The floods have inflicted damage to the economy which may, by some estimates, reach $43 billion, while affecting 30 percent of all agricultural land," he said. Agriculture is the mainstay of the economy, with cotton the main cash crop, and the sector is one of the biggest sources of employment.
Facing the prospect of long-term economic pain inflicted by the floods, Pakistan hopes the International Monetary Fund (IMF) will soften the terms of an $11 billion loan. Pakistani and IMF officials are meeting in Washington to work out the impact to the already fragile economy from the floods.
"This economic loss will translate into massive job losses affecting incomes of thousands of families, which may have serious social implications," said Gilani, whose government was heavily criticized for its slow response to the catastrophe.
"The overall performance of agriculture consequently will be much lower this year and the next year. This loss will have a snowball affect on manufacturing, services and export sector. Most families face a real risk of income and employment losses."
The next wheat harvest is at risk after the floods destroyed more than 500,000 tonnes of seed stocks in Asia's third-largest wheat producer, the UN's food agency said.
Grim outlook
Pakistan's budget deficit is expected to climb to 6-7 percent of gross domestic product in the fiscal year 2010/2011, compared to an earlier forecast of 4.5 percent, said Gilani.
Pakistan is also likely to miss its annual inflation target of 9.5 percent for the same fiscal year, with inflation likely to range between 15 to 20 percent, he said.
Standard Chartered Bank also has a grim outlook for Pakistan's economy, lowering its growth forecast to 2.5 percent from 4.5 percent in the fiscal year ending in June 2011.
Many Pakistanis, who have lost homes, families and livelihoods in the disaster, are furious at the government for not doing enough to help them.
The powerful military has taken charge of relief efforts, but Islamist charities, some linked to militant groups, have also stepped in, raising concerns they may exploit public anger to gain recruits. Anti-government protests have broken out in some flood-stricken areas.
Waters have receded in some areas and people are returning to smashed villages to try and rebuild their homes and lives.
The UN is concerned that water-borne diseases will affecting millions, with nearly 540,000 cases of acute diarrhea reported alone. A hospital in the northwest has treated about 1,180 patients from diarrhea, trauma, stress and dehydration.
"It's warm and there are more terrible conditions for infection to spread. These conditions will continue for at least three to four months," said doctor Nadeem January
Before the floods, Pakistan said it had weakened Taliban insurgents. Pakistan is a key US ally in the region.
Government air raids have killed up to 45 militants, their family members and other civilians with no ties to the fighters, including women and children, officials said on Wednesday. Such strikes have undermined public support for the army.
Washington, which wants a stable Pakistan because it is a frontline state in the US war on militancy in Afghanistan, has provided more flood aid than other countries.
Mistrust exists between Pakistan and the United States even though they have been allies for decades.
Pakistan's army said on Wednesday it scrapped talks with US military officials after a military delegation sent to Washington had to go through "unwarranted" airport security checks.
The delegation was visiting the United States at the invitation of the US military's Central Command, which oversees the wars in Iraq and Afghanistan.
[Additional reporting by Zeeshan Haider and Augustine Anthony in Islamabad and Chris Allbritton and Rebecca Conway in Pabbi and Svetlana Kovalyova; Editing by Miral Fahmy.]
See also:
 |