ISLAMABAD: Pakistan on Thursday saw its economic growth rate falling massively to two per cent during the current fiscal year against the budgetary target of 5pc as floods have plunged the country into crisis, particularly in Sindh and Balochistan.
The official estimate for a revised GDP growth rate at 2pc is in sharp contrast to the 3.5pc growth rate forecast by the Asian Development Bank (ADB) a day earlier on Wednesday. The State Bank of Pakistan had earlier projected 2.4pc growth rate, while the government had been estimating a 2.2 to 2.3pc growth rate for the current year.
As a consequence, Pakistan would need to have “continuous and constant engagement” with the development partners, lenders and donors to meet the financing needs of rehabilitation and reconstruction, including through access to special international financial instruments meant for climate change and green economy, Planning and Development Secretary Syed Zafar Ali Shah said.
Briefing journalists on Thursday, he said the ADB had finalised about $1.5bn support to Pakistan under counter-cyclical programmes earlier planned for post-Covid recovery and the government had desired this to be soft financing at around 2pc interest instead of ordinary capital resources (OCR) that attract about 3.15pc interest.
He said preliminary damage needs assessment had put the total losses and reconstruction costs of the flood-related damages to about $30bn that was subject to change following on-ground verification — a mandate given to a core group of international agencies and development partners like UN organisations, the World Bank and Asian Development Bank, European Union and friends like Turkiye.
The deadline for damage need assessment and reconstruction with input from provinces, including for over 113 calamity-hit districts, has been set for Sept 30. The core group will submit its final report by Oct 15.
The resources would have to be arranged through domestic and external sources and would need substantial readjustments in Rs2.2 trillion worth of federal and provincial development budgets, Mr Shah said, adding that the diversion of funds would be based on a damage need assessment report.
He said the government had already redirected $303 million of donor funding towards flood relief efforts. This includes $300m funds in the pipeline from an ongoing world bank programme and $3m of the ADB. He said the international community had pledged $160m so far, but the reconstruction and rehabilitation efforts would require a far higher amount of funds.
He said the planning commission’s macroeconomic experts had previously estimated loss of GDP to about 2.3pc instead of the 5pc target based on the first 15 days of floods, while Pakistan Bureau of Statistics (PBS), based on satellite imagery provided by Suparco and extrapolated with household and living standard surveys, worked out losses to the tune of $30bn, including reconstruction costs.
Based on these and provincial reports, a core group of the World Bank, the ADB and UN agencies had arranged 100 experts of almost 17 sectors to work with the steering committee on floods for verification and reconciliation of damage need assessment with international best practices.
The exercise will be led by the government of Pakistan but supported by experts of international organisations.
For this purpose, the National Command and Operation Centre (NCOC), which helped coordinate Covid-19 operations and planning, has been revived. While Planning Minister Ahsan Iqbal is coordinating the NCOC, Prime Minister Shehbaz Sharif is himself overseeing the process.
Mr Shah said the latest reports based on cotton arrivals suggested that damages to the cotton crop appeared much lower than the 3.5m bales estimated earlier. “The cotton crop loss could vary between 2.5m and 2.7m bales but not 3.5m bales feared earlier,” he said.
Another key factor could be all sorts of actual losses in Sindh, where the provincial government was reluctant, and rightly so, to finalise its estimates because of standing water in vast areas.
Also, it has also to be seen if wheat sowing is possible in Sindh and to what extent. Moreover, the final estimates would become clear once it is ascertained if the affected people who have lost livelihoods could be supported for three or six months, depending on the ground situation.
The planning secretary agreed that while the UN’s appeal for relief funds would be increased, as its secretary general had already hinted, grants for rehabilitation and reconstructions may remain fewer because of global economic challenges in which the countries like even US and UK were going through 40-year-high inflation rates.
Therefore, the long-term engagements for special funding vehicles like the green economy and climate change would be focused on, from where Pakistan could secure $2.2bn to $3bn.
He said damage to the country’s rail network had been assessed at $2.3bn for the reconstruction of railway tracks, bridges and others associated infrastructure. There is another estimate of $3bn for reconstructing houses only. He said the provinces were continuously working on damage assessment, but Sindh could make progress only after the water receded.