Saturday, September 17, 2022
Our Correspondent

Initial estimates put flood losses over $30b: minister

Pakistan to seek loans from IMF, multilateral and bilateral creditors after assessing flood losses, Dr Aisha Ghaus says

Our Correspondent
Flood victims use boats to reach their villages, following rains and floods during the monsoon season in Sehwan, Pakistan, September 16, 2022. — Reuters
Flood victims use boats to reach their villages, following rains and floods during the monsoon season in Sehwan, Pakistan, September 16, 2022. — Reuters

  • Dr Aisha Pasha says WB, ADB, UN conducting damage assessments.
  • Pakistan to seek loans from IMF after assessing flood losses, she says.
  • State minister says petrol price rising due to rate hike in int'l market.

ISLAMABAD: Minister of State for Finance Dr Aisha Ghaus Pasha said Friday the devastating floods caused total accumulated losses of over $30 billion according to an initial assessment, The News reported.

Talking to reporters after attending the NA Standing Committee on Finance, she said the World Bank (WB), Asian Development Bank (ADB), and the UN were conducting a damage need assessment (DNA) to assess the exact losses and construction costs.

Dr Pasha also said Pakistan would request the International Monetary Fund (IMF) and other bilateral creditors for loans after ascertaining the losses incurred due to the natural calamity.

For the upcoming ninth review under the Extended Fund Facility (EFF), the IMF has slapped conditions for raising electricity prices further and discouraging more tax exemptions.

It also imposed conditions to achieve a primary surplus of Rs153 billion for the current fiscal year.

Record monsoon rains in south and southwest Pakistan and glacial melt in northern areas triggered the flooding that has affected nearly 33 million people in the South Asian nation of 220 million, sweeping away homes, crops, bridges, roads and livestock.

The losses will slash the country's GDP growth to around 3% from the estimated target of 5% set out in the budget when it had narrowly escaped defaulting on its debt in a balance of payment crisis.

Pakistan was already reeling from economic blows when the floods hit, with its foreign reserves falling as low as one month's worth of imports and its current account deficit widening.

The economy has yet to show any positive response to Islamabad resuming an International Monetary Fund (IMF) programme delayed since early this year. The Pakistani rupee has been tumbling and inflation has topped 27%.

The National Disaster Management Authority has reported 1,508 flood-related deaths so far, including 536 children and 308 women.

Petroleum prices and IMF programme revival

The National Assembly’s Standing Committee on Finance and Revenues held its meeting under the newly-elected Chairman Qaiser Sheikh at the Parliament House on Friday.

The chairman of the NA panel showed his annoyance over the absence of the secretary finance and State Bank of Pakistan's governor from the meeting. Some committee members asked the chairman to issue a summon for the SBP governor.

Dr Pasha told the committee that the price increase was due to higher petroleum product prices and commodities in the international market and the depreciation of the rupee against the dollar.

She said the IMF had so far disbursed $3.9 billion while Pakistan would get $2.6 billion in the remaining period till June 2023. After extending the EFF programme, the total accumulated size had increased to $6.5 billion.

The chairman then asked about the conditions imposed by the IMF.

Pasha replied the government did not have sufficient foreign exchange reserves and there was no other option but to go back to the IMF program.

She said the revival of the IMF programme remained a priority of the government. The IMF asked to slash down the circular debt under a management plan, public finance management, single treasury accounts, controlling SOEs losses, and implementation of other conditions.

The minister of state said that the IMF program was revived after implementing the tax reforms in the budget for 2022-23, and showing a revenue surplus by provinces and increasing energy prices.

The government, she said, had to withdraw subsidies on POL and electricity and impose a petroleum levy.

She said the IMF’s 10th review under the EFF would be done in February 2023 and the eleventh review would be accomplished in June 2023.

The Member Operation, NDMA, Brig Umar Chattha, said that flood-related survey for Balochistan would be completed on September 25 while it would be done in Gilgit-Baltistan till September 20.

— Additional input from Reuters