Muhammad Soban

The recent monstrous flood wreaked havoc on infrastructure and crops in 118 districts of Pakistan besides claiming more than 1,000 lives and perishing a large number of cattle heads, WealthPK reports.

The floods have affected millions of people, depriving them of their homes, crops, livestock and other valuables. The exact number of losses will be ascertained after the completion of the damage assessment survey.

According to the State Bank of Pakistan (SBP), at least 118 districts of Pakistan have been affected by the recent floods. In a recent meeting, SBP officials said that the number of the affected districts was more than the earlier reported figures.

The meeting was chaired by Minister of State for Finance Aisha Ghaus Pasha. The representatives of the Ministry of Planning and relevant officials also attended the meeting. Both the central bank and the Ministry of Finance provided their preliminary assessments of the economic impact of the floods to the participants of the meeting.

The central bank officials said that satellite images showed the floods caused destruction in at least 118 districts, as opposed to 110 districts reported earlier. The recent floods affected high economic activity areas, and the central bank's assessment suggests significant economic damage.

The state minister did not disclose the exact quantum of the losses, however, he said that the damage was much higher than Rs2 trillion.

According to the SBP, economic growth has slowed to around 2%. The central bank officials said that they would update the initial estimates.

In the current fiscal, the Ministry of Finance estimated that economic growth would slow down to 2% as compared to the target of 5%. The central bank derived its estimates using a projection of 4% growth as a starting point.

The Ministry of Finance has estimated overall economic losses due to the floods at Rs2.5 trillion but the central bank did not present its final figures in the meeting. The devastating floods in the year 2010 slowed down the economic growth of the country by 2% with an estimated loss of $9.7 billion.

According to the minister of state, the central bank believes that inflation will rise in the short-term but it will remain around its earlier forecast of close to 20%. The initial assessment by the Ministry of Finance showed that due to disruption of the supply chain, average inflation could also rise from 24% to 26%.

The minister of state said that the Planning Commission was tasked to study the impact of disruption of the supply chain on inflation. Throughout August, inflation reached an all-time high of 27.3%. She said the government wanted to provide an accurate estimate of flood losses so that everyone could own it.

Pakistan is also considering seeking emergency loans from the International Monetary Fund (IMF) and other lenders. It is too early to contact the IMF, according to Finance Minister Miftah Ismail, especially when the global lender just approved a $1.1 billion tranche for Pakistan.

The government may seek assistance from IMF once initial flood loss estimates are available, according to the information gathered by WealthPK.

Credit : Independent News Pakistan-WealthPk