According to a report, economic growth is predicted to slow down and inflationary pressures will "aggravate" further.
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| Source: Online |
ISLAMABAD: The Planning Commission of Pakistan has estimated the cost of flood losses and damages at $28 billion. This is the fourth estimate offered by a Pakistani authority since the devastating floods, and the Planning Commission also anticipates a lengthy 10-year reconstruction period.
The $28 billion price tag includes $11 billion in losses due to slower-than-targeted growth of 5%, a figure that the international lenders may contest because they were only projecting a 3.5% growth rate in the pre-flood scenario.
On Monday, the Planning Commission presented a summary of the damage need assessment and post-flood economic outlook.
This occurred as a thorough post-damage and need assessment was being carried out in conjunction with the international financial institutions, the European Union (EU), and the United Nations (UN).
Experts were informed of the preliminary estimates with the intention of getting their advice on how to move forward.
The findings presented at the meeting state that some preliminary estimates place the cost of the damage at $28 billion. Prior to this, the Ministry of Finance initially estimated the cost at $10 billion to $12 billion, but later increased the estimate to $18 billion. The National Flood Response Coordination Centre subsequently proposed the $40 billion figure.
The report states that the economic growth rate is forecast to slow to 1.8% to 2.3% and that inflationary pressures "are expected to further aggravate."
The development happened on the same day that the Pakistan Muslim League-Nawaz welcomed back Senator-elect Ishaq Dar, its financial whiz, in an effort to help the nation out of its current economic crisis. In particular, Dar's return helped the rupee's value recover by Rs3 to a dollar.
According to the report, supply chain disruptions and a shortage of perishable goods are expected to cause inflationary pressures to worsen even further.
According to the Planning Commission, inflation is anticipated to remain between 23-25% as opposed to the average inflation target of 11.5%. This estimate is lower than that of the World Bank, which predicts that inflation will exceed 27% in this fiscal year.
According to the Planning Commission, compared to the Annual Plan target of 5%, the Gross Domestic Product growth rate for the current fiscal year is estimated to be between 1.8 and 2.3%. This results in a loss of income of Rs 2.4 trillion, it continued.
The WB has estimated a 1.4% to 2.4% GDP growth for this fiscal year, and the Planning Commission's projections are consistent with the judgement of the Washington-based lender.
The Planning Commission calculated that the provincial governments suffered losses totaling $10 billion out of the $28 billion. Punjab suffered a loss of $550 million, Sindh lost $5.9 billion and was the worst-affected province, Khyber Pakhtunkhwa lost $540 million, and Baluchistan lost $3 billion.
Infrastructural losses are estimated at $2.4 billion by the Ministry of Railways, $290 million by the Ministry of Water Resources, and $210 million by the National Highway Authority.
In addition, the Planning Commission has estimated the cost of economic losses at $11 billion.
According to the government's estimate, the Flood Protection Plan-IV of 2017 will require $4 billion for the construction of protection walls, the installation of early warning systems, and advance metering. It's interesting to note that according to the Planning Commission documents, the CCI approved "the final draught version of NFPP-IV costing Rs332.2 billion" (approximately $1.4 billion at current exchange rates) in May 2017.
However, according to the documents, "the umbrella PC-I of NFPP-IV could not be approved due to financial constraints."
A loss of 1.8 million to 2 million jobs is predicted by the Planning Commission. According to the Planning Commission, poverty may rise by 4.5 to 5% on average, translating to a population below the poverty line of 9 to 12 million people, which is 3.5 million fewer than the World Bank's prediction.
Due to a decline in global demand and lower exports of rice, cotton, fruits, and vegetables, the Planning Commission has estimated that export losses will total $3 billion during the current fiscal year. Due to flood damage, more raw cotton, wheat, and vegetables are anticipated to be imported. The availability of water is anticipated to enhance the energy mix and reduce the need for imported oil, it continued.
AGRICULTURE
According to the report, the flood has significantly impacted important crops like cotton, rice, maize, and sugarcane, and it is predicted that major crop growth will remain negative by 14% to 15.4%. Other crop growth is anticipated to continue to be negative by 12 to 15%.
There have been about a million deaths of both large and small animals. Livestock growth that had been predicted to increase by 3.7% is now predicted to stay between 2 and 3%. The agriculture sector is predicted to experience growth losses of between 3.5 and 4.5%. As a result, compared to the target of 3.9%, agriculture growth may continue to be negative by 0.7% to 2.1%.
INDUSTRY
According to the report, the industrial sector's growth will be reduced by 3.5% to 4% as a result of its dependence on agriculture. Reduced domestic cotton supply and high global prices will slow the growth of the textile industry. Automobile and fertiliser industries are also anticipated to be impacted by the decline in demand. Compared to the target of 5.9%, industry growth is anticipated to be between 1.9 and 2.5% in FY 2023, according to the Commission.
SERVICES
According to the report, wholesale and retail trade services will suffer, and their growth will stay at 3% instead of the intended 6.5%. Due to damage to crops, livestock, roads, and rail networks, it is anticipated that the transport and storage services will grow by 3% instead of the intended 4.5%.
Services related to education and hospitality are also anticipated to suffer. In contrast to the initial target of 5.1%, services growth is now anticipated to be between 3-3.5% in FY 2023.
As the agriculture sector has been severely affected and will have a negative impact on our economy, the early recovery of the flood victims is the immediate challenge, according to Ahsan Iqbal, the Planning Minister, who presided over the meeting.
According to Iqbal, the action-oriented plan will be carried out over a period of six months to ten years, and it is intended to rebuild and restructure the country's affected regions. According to the report, the period for rescue and relief will likely last between one and two months, while the period for rehabilitation could last between two and six months.
Two to ten years are predicted to pass during the reconstruction process.
The owner-driven reconstruction approach should be used with efficient mechanisms to ensure compliance with the building codes developed by the government, according to Dr. Adnan Rafiq, Member Governance, Planning Commission.
Additionally, he made the case that women and young people should be given priority in the rehabilitation process.
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