Floods swamping Pakistan

Floods in Pakistan following a month of monsoons have displaced about 20 million

people, submerged 1,500 kilometers (930 miles) of roads, destroyed $1 billion of crops
and killed 10 million head of livestock. The Karachi Stock Exchange 100 Index, the
nation’s benchmark index, has tumbled 6.3 percent this month, the third-worst
performance among 93 major global indexes tracked by Bloomberg.
According to government official the prices of food and essentials have gone up
significantly.
“The overall impact of the floods is going to be very serious for the economy,” said
Nasim Beg,

AFFECTED AREA
Flood Cause Damage To Infrastructure
The economic consequences of the floods will be felt for months ahead. Not only are
current incomes lost, but people will also have to endure heightened prices until the
economic infrastructure is rebuilt. "There is a massive loss of infrastructure,"
says Sheikh. "Dams will have to be repaired; in the northwest, not a single bridge has
survived along the Indus River; roads have to be rebuilt; and schools in the countryside
need repair."
Flood Causes inflation in Pakistan
Pakistan’s inflation rate stayed above 12 percent for a seventh month and may
accelerate after the nation’s worst floods damaged rice and maize crops.

Consumer prices rose 12.34 percent in July from a year earlier after climbing 12.67
percent in June, the statistics department said on its website today. The median of 11
estimates in a Bloomberg News survey was for a 12.38 percent gain.

Inflation may quicken as Pakistan faces its most destructive floods that have uprooted
14 million people and inundated Punjab and Sindh, the nation’s main farming provinces.
The floods have set back the nation’s development by many years, Prime Minister
Yousuf Raza Gilani said.

“In the current situation, the inflation rate is expected to remain above 12 percent for a
few more months,” said Mustafa Pasha, an economist at BMA Capital Management in
Karachi.

The benchmark Karachi Stock Exchange 100 Index climbed 0.8 percent to 9,969.45 at
11:35 a.m. local time, halting a four- day, 4.8 percent slump. The Pakistani rupee was
little changed at 85.71 per dollar, while the yield on the benchmark 12 percent bond due
August 2018 was unchanged at 13.52 percent.

Fuel Prices
Inflation slowed in July after the government cut gasoline prices by 1.5 percent to 67.95
rupees a liter during the month and reduced the cost of light diesel oil by 5.4 percent.

Rising prices prompted Yaseen Anwar, acting Governor of the State Bank of Pakistan,
to increase the central bank’s benchmark discount rate to 13 percent from 12.50
percent on July 30.

The floods first struck the western province of Baluchistan on July 22 before inundating
Punjab and Sindh, the country’s most populous provinces.

About 20 percent of the rice crop in Sindh has been damaged, Abdul Majeed Nizamani,
president of the Sindh Abadgar Board, a farmers’ group, said on Aug. 9. Half the red
chilli and tomato harvests and 70 percent of the onion crop in the province were also
destroyed, he said.
The World Bank said today it will draft a reconstruction plan for Pakistan as the lender
leads efforts to assess the impact of the nation’s floods.

The extent of the flood damage and its impact on Pakistan’s economy can’t be
estimated until the assessment is done, Shahzad Sharjeel, senior external affairs officer
for the World Bank in Islamabad, said in an e-mail to Bloomberg News.

Floods swaping Pakistan Agriculture sector completely

Agriculture acccounts for 20% of Pakistan gross domestic product. Goverment said it
would take two years to porvide farmer with crop, fertilizer, seeds and foods. Which
means that atleast for twa years Pakistan agriclture system completely destoried.

According to officials about one billion dollar crop loss which is ready and going to
harvest.

According ti Ibrahim Mughal head of Independent Agri Forum Organisation told AFP
that they have lost around 20% of cotton crops which is raedy for harvest. Textile &
agriculture accounts for about three quarter of Pakistan’s export target which is 21
billion dollar. But this flood enormous cotton crop. "The floods have eaten three million
tons of cotton -- over 20 percent of our 14 million bales for this year. It will negatively
affect by 25 percent large-scale manufacturing and ultimately impact on exports,"
Ashfaq Hasan Khan, a former government economic adviser, told AFP.

Damage to cotton, rice, sugarcane and maze will hit the export sector of Pakistan which
is the main source of forex reserves and economic growth.

There are fears that Pakistan risks running up a higher fiscal deficit which would lead to
increased government borrowing.Before the floods, the country had a healthy forex
reserve of 16.45 billion dollars, thanks to a 11.3 billion dollar IMF rescue package meant
to stave off Pakistan's worst balance of payment crisis and 30-year-high inflation in
2008.

After recording its lowest growth in a decade, GDP had been expected to grow by 4.5
percent in the fiscal year ending June 30, 2011, but the floods could shave at least one
percent off growth estimates.

Flood swap Pakistan Economic Growth

The International Monetary Fund (IMF) said that the floods will cause "major harm to the
economy" of Pakistan as donors and investors' concerns are growing over the disaster's
impact on an already fragile economy, reported local media Daily Times on Wednesday.

The report quoted an IMF spokesman as saying on Tuesday that the floods "are very
likely to cause major harm to the economy in terms of loss of output and budgetary
consequences."
The spokesman said IMF officials were in touch with the Pakistani authorities to assess the situation.
The report also quoted a finance ministry official as saying that the country's economic
growth target of 4.5 percent for the fiscal year 2010-2011 would have to be revised
downwards once the extent of the damage caused by floods is known.

Pakistan's economy was already fragile, dependent on a $11.3 billion support package
from the International Monetary Fund (IMF). Before the floods, the country was
struggling to meet the fiscal-discipline requirements of the package. Pakistan has a
bloated public sector, a narrow tax base and a chronic balance-of-payments problem.
"Now, it alters all the calculations, all the projections, all the scenarios," Abdul Hafeez
Sheikh, Pakistan's Finance Minister, tells TIME. "It is still too early to assess the full
impact of the disaster, but the damage is colossal, it's still unfolding. It will run into
billions and billions of dollars." So far, some 40 countries have contributed $222 million,
according to figures collected by the government of Pakistan - a fraction of what's
needed.

Following are the top 10 donor for flood affective to Pakistan.

Miranda said assessing the extent of damage the floods inflicted would not be possible until the
end of September. Shortly after that, Pakistanis made homeless by the floods are likely to face
a new set of hardships."The mammoth task ahead of us is now to do two things -- to face the
winter and then face the reconstruction," said Miranda. (Editing byAlistair Scrutton)