Adverse effects of recent floods in Pakistan

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Natural Disaster is the consequence of natural jeopardies which includes inundation, twister, vent eruption, temblor or landslide that affects the environment, leads to fiscal, environmental and/or human losingss. It is awful event that is non caused by human activity and consequences in deceases, hurts or harm to belongings. The resulting loss depends on the capacity of the population to back up or defy the catastrophe, and their resiliency. This perceptive is concentrated in the preparation: “ catastrophes occur when jeopardies meet exposure.A natural jeopardy will hence ne’er consequence in a natural catastrophe in countries without exposure, e.g. strong temblors in uninhabited countries. The term natural has hence been disputed because the events merely are non jeopardies or catastrophes without human engagement. Natural catastrophes which occur due to the alteration of home base tectonics are temblors, vents, geyser eruptions and tsunami. These different types of natural catastrophes have taken away 1000000s of lives and have caused millions of dollars in footings of fiscal losingss.

Pakistan is one of the states that have experienced natural catastrophe. The different types of natural catastrophe that Pakistan has experienced are:

Earthquake in 2005 on 8th October that killed 80,000 people and injured 50,000.

Windstorm in 1965 on 15th December that killed 10,000 people.

Flood in 1950 that killed 2,900 people.

Flood in 2010 that killed near to 2000 people.

Flood in 1992 September killed 1,334 people.

Flood in 1998 3rd March killed 1,000 people.

The recent inundation in Pakistan was one of the worst natural catastrophes in Pakistan ‘s history and in universe ‘s history. It was one of the biggest catastrophes that the universe have of all time experienced non in footings of decease but in footings of people affected, country affected and in footings of fiscal losingss that occurred. Almost one- eighth of the population was straight affected by inundation. The inundations that late caused great harm to Pakistan had more impact than the combine impact of tsunami in 2004, Haiti temblor in 2010 and Earthquake of 2005 that affected northern countries of Pakistan. The affected people in these combine three catastrophes were about 11 million people but in the recent inundation affected around 20 million people across Pakistan.

Pakistan has experienced inundations and the inside informations of those inundations are provided below:

Flood in September 1992 affected 12 million people

Flood in August 1992 affected 6 million people

Flood in August 1976 affected 5 million people

Flood in July 1978 affected 2.2 million people

Flood in July 1995 affected 1.2 million people

The Flood of 2010 which affected around 20 million people in Pakistan straight and left them homeless have been the worst inundation that Pakistan and the universe have of all time seen. Merely eight million out of 20 million people were affected in the state of Punjab. It has caused one million millions of dollars losingss to Pakistan ‘s economic system, agribusiness, imports etc. Harmonizing to World Bank and Asian Development Bank the economic impact of recent inundation is estimated every bit much as 43 billion dollars.

Subject:

Adverse effects of inundations in Pakistan

Purpose Statement:

To find the inauspicious effects of recent inundations in Pakistan.

Research Questions:

How the recent has inundations affected Pakistan?

Sub-Research Question:

How has the inundations affected our agribusiness?

How has the inundations affected the Bankss?

How has the inundations affected our economic system?

How has the inundations affected our Imports and Exports?

Hypothesis:

The recent inundations have an inauspicious affect on our economic system.

Methodology:

Our research is wholly based on aggregation of informations through articles, interviews and studies. We have found articles and studies on cyberspace that have been antecedently written on this subject. We have collected facts and figures from web sites of NGOs, Social public assistances and authorities. We have conducted interviews with the NGOs and the public assistance organisations to seek to acquire the replies of our research inquiries. One of our group member besides went to the affected topographic points to seek to cognize the land state of affairs. Our sample size contained 40 articles and so we shortlisted 17 articles which were specifically related to our subject. We have divided our research inquiry into four classs and found their replies separately every bit good.

Consequence on Agribusiness:

Agribusiness sector have been the anchor of the Pakistan ‘s economic system and Pakistan is known as agri- based state. Harmonizing to the facts provide by the Food and Agriculture Organization ( FAO ) , Agriculture is one of the chief sector of Pakistan ‘s economic system using more than 42 % of the labour force and histories to 23 % of the GDP ( Gross Domestic Product ) . The recent inundations did non merely led to human loss but had a big impact on the agribusiness sector straight. It destroyed many harvests and over an estimated country of 1.38 million estates were affected due to recent inundation of 2010.

Pakistan ‘s major harvests are cotton, wheat and rice. Wheat is one of the Important green goods of Pakistan has been badly damaged in the inundation. Harmonizing to the informations provided by Ministry of Food, Agriculture and Livestock shows and I quote:

“ Punjab: 44,896 metric tons

Khyber Pukhtunkhwa: 80,823 metric tons

Sindh: 5,41,696 metric tons

Balochistan: 321, 651 metric tons “

The above facts stated by the Ministry of Food, Agriculture and Livestock shows that sum of 0.6 million tones of wheat has been damaged throughout the county and major topographic points that were affected were parts of Sindh and Balochistan but the authorities is taking out positives from these inundation that is they think that these inundation would take to more fertile land and that would take to bumper harvest in approaching twelvemonth in the flood- affected parts.

Harmonizing to analysis done by Dr. Abdul Rashid, Member Monitoring and Evaluation, Punjab Agriculture Board, he told Dawn.com and we quote “ This fertile bed will ensue in good outputs in the coming old ages. ”

Harmonizing to former Federal Minister for Food Agriculture and Livestock Khair Muhammad Junejo, he said and we quote “ Flood overall consequence for land will be good. ”

Dr Abdul Rashid farther said and we quote “ The inundations will reload the H2O in the dirt and belowground H2O resources will increase. ”

Harmonizing to another expert Dr Shamsuddin Tunjo, professor at the module of Crop Production at the Sindh Agriculture University, Tandojam is of the sentiment and we quote: “ Plain lands may profit in the footings of fertilityaˆ¦ the inundations gnaw away rich beds of dirt and if H2O stands for a long clip in the land, the following season ‘s harvest may non be grown. ”

Harmonizing to the Facts Stated by Food and Agriculture Organization ( FAO ) which works under the United Nation Organization:

It is about impossible to mensurate the gravitation of losingss to the agribusiness sector as they are immense and farther flowering.

About 80 % people in the inundation affected countries rely on agribusiness for their support and they see it as their chief beginning of income

One of the toughest undertaking that the husbandmans will hold to face is to retrieve their land in clip when the new season begins in September/ October.

Overall throughout the state 1000000s of people have lost their full agencies to prolong themselves in the immediate and longer term, all this is due to the destruction/ harm of standing harvests and agencies of agribusiness production.

Harmonizing to FAO although they have completed in half of all inundation affected territories shows that 1.3 million hectares of standing harvests have been damaged.

Harmonizing to their statistics 0.5-0.6 million tones of wheat stock have been affected.

Harmonizing to their Livestock Department recent inundation caused decease of 1.2 big and little animate beings, and 6 million domestic fowl.

With the appraisal still taking topographic point, the losingss are traveling to impact 1000000s straight and indirectly and will hold the direct impact on the state ‘s GDP as these harvests would hold to be imported to run into the state ‘s demand for wheat and rice.

Response to demands in the agribusiness sector can non be ignored nor delayed.

Harmonizing to their estimations standing harvests on over 10,000 hectares have been washed off and about 8000 farm animal have been destroyed in Khyber Pukhtunkhwa state entirely.

The worst affected territories are Swat, Nowshera, Charsadda, Shangla and Kohistan. Nowshera and Charsadda are the most fertile countries in the state bring forthing assortment of harvests.

Wheat is the chief basic in Pakistan, carry throughing about 35 % of the mean per capita Calorie demand in 2008. This twelvemonth in Pakistan a record crop took topographic point for wheat around 23.4 million tones prior to deluge, the inundation H2O consequence in serious losingss of wheat stocks that were held at family degree. The loss of wheat can hold a negative impact on the planting of following season which will get down in October/November because the inundation have caused loss of seeds, fertilisers, farm animal and nest eggs.

Harmonizing to their estimations 1.2 million farm animal and 6 million domestic fowl have perished. One of the chief ground that this figure is so high is because when people were rescued during the recent inundation people did non take their animate beings with them and opted to salvage their life. The major challenge faced by different bureaus working in Pakistan during this inundation was to supply nutrient to animate beings who survived as the supply was really limited and they face hard undertaking of transporting this nutrient supply as bulk of substructure was besides destroyed. The United Nation has appealed for exigency helper of $ 5.7 million for farm animal.

A closer expression has been done by CASSIM Investments ( PVT ) LTD ( 18 Aug 2010 )

They have identified major harvests that have been affected due to recent inundation in Pakistan and they have given inside informations of amendss incurred by different harvests.

Cotton: It has been worst hit harvest, as harmonizing to initial estimations we have lost every bit much as 2 million bales. This will direct impact on our fabric industry and will take to import of cotton. This will set force per unit area on our current history shortage and lead to deprecation of our currency.

Wheat: Harmonizing to them, they estimate they due to recent inundation that have damaged wheat severely will take to wheat deficit which is chief basic in Pakistan.

Rice: Pakistan is one of the chief rice exporter in the universe and they estimate that Pakistan might non be able to run into its mark of rice exports this twelvemonth as they expect losingss in harvest every bit good. This will ensue in loss of foreign exchange and broadening of current history shortage

Sugar: They have estimated a loss of 500,000 metric tons of sugar cane, about 2-3 % of the sugar cane demand. They believe it will hold minimal impact on the handiness of refined sugar.

Effect on Economy

The congressional research study that was present to the Congress member on recent inundation in Pakistan stated the economic effects of inundations. Harmonizing to them it is excessively early to measure the harm caused by inundation and it can merely be assessed one time the H2O goes off to analyze the extent of harm caused to harvests, lodging, roads and Bridgess, electrical grid and other critical elements to its economic recovery. Harmonizing to the preliminary appraisal done by the Asian Development Bank and FAO shows that around 14 % of cultivated land has been affected by inundations, that resulted in loss of 25 % of the cotton harvest and some other harvests, Pakistan has besides lost 1 % of its farm animal and there is danger of this per centum lifting due to feed deficits and deficiency of veterinary attention after the inundation Waterss recede.

The broader consequence of inundation can besides be felt with monetary value of domestic points surging and making high rising prices. In add-on to this authorities disbursement on alleviation activities is traveling to widen the financial shortage.

Harmonizing to United Nation Organization it estimates that the recent inundation will increase Pakistan ‘s financial shortage outgos by $ 4 billion in financial twelvemonth 2010/11. A preliminary rating reported submitted to the Pakistan ‘s ministry of finance has estimated that there will be zero percent GDP growing and 25 % rising prices this twelvemonth. The figure shows that Pakistan is traveling to confront tough challenges in front in twelvemonth 2010/11 because the marks set by the IMF ( International pecuniary fund ) varied with these figures. IMF set a mark of 4.5 % GDP growing and with 9 % rising prices. The long-run economic effects are non easy to measure. Harmonizing to one beginning, mending damaged substructure that includes roads, Bridgess and dolls would be Pakistan whacking $ 15 billion. There are 44 critical factors that will halter the velocity of Pakistan ‘s economic advancement over the following few old ages. Now Pakistan which is already face tough challenges since 2008 has the lowest TAX-GDP ratio in the universe with figures accounting to 8-9 % . The World Bank and the Asian Development have agreed to give loans $ 1 billion and $ 2 billion severally but they have besides attached conditions to these loans. The IMF which have provided loan of $ 10-11 billion have asked Pakistan to reexamine its pecuniary policy and financial policy. They have set marks for Pakistan and prior to these inundations Pakistan have failed to accomplish some of the marks set by the International Monetary fund. The IMF set status of take downing financial shortage to 5.1 % during this twelvemonth while Pakistan exceeded this bound and had a financial shortage of 6.2 % of the GDP, now that inundation have occurred it looks impossible that Pakistan would be able to run into the marks set by IMF. Pakistan have to pay back the loan to IMF by 2012/13 and it would be the state $ 3 billion per twelvemonth. Pakistan external debt has already amounted to $ 55.5 billion which is 56 % of the GDP. These figures are a prove that Pakistan which is already unable to run into the demands set by the international givers will happen it impossible to run into the mark after the recent inundation that have moved Pakistan decennaries back.

Harmonizing to CASSIM INVESTMENTS ( PVT ) LTD

They have stated that since the full substructure have been severely destroyed specially in Khyber Pakhtunkhwa and some countries of Punjab. All this will hold to construct to resuscitate economic activity and therefore this has forced the authorities to cut down is Public Sector Development Program by about 50 % this means that all the development undertakings which were taking topographic point in order to better the economic system have now been stopped and the financess have been shifted towards the inundation affected countries.

They have besides stated that the imports of goods for alleviation intent will widen the current history shortage. Foreign Aid will assist the state in the short term, but will compress the sum of PSDP available with the fiscal cost load in the hereafter. A current history shortage will do devaluation of the currency, which is good for sectors for exports but if we see in our state it will hold negative impact because devaluation would ensue in high rising prices damaging Pakistan ‘s financial policy and pecuniary policy.

Harmonizing to an article in Daily Times on August 29 2010 it states that and we quote “ Government of Pakistan will revise its economic growing marks and major budget projections in audience with International Monetary Fund ( IMF ) , official beginnings informed here on Saturday.

Gross Domestic Product ( GDP ) growing mark is to be lowered from 4.5 % to around 2.6 % , nevertheless, gross aggregation mark and rising pricess projections to be revised upwards maintaining in position the inundations impact.

Damage caused to the anchor of the economic system the agribusiness sector of is provisionally estimated at Rs 244.6 billion and losingss due to the harm to the substructure and private and public belongingss are estimated to be around Rs 600 billion in all four states, Azad Jammu and Kashmir and Gilgit Baltistan.

Consultation on alteration in macro-economic marks is to be taken during the on-going 5th reappraisal of Pakistan ‘s economic system with IMF governments at Washington. Economic growing marks and major budget projections for the 2010-13 were approved under the Medium Term Budgetary Framework for the following three old ages, nevertheless, the inundations have changed the full scene on the economic landscape of the state that requires major alteration.

Devastation caused by the inundations across the state has earnestly damaged the chief sectors of economic system particularly the agribusiness sector and Pakistan ‘s development precedences have changed and a major part of resources are being planned to deviate towards rehabilitation of inundation affectees. Recent inundations across the state have caused desolations deserving Rs 244.6 billion in the agribusiness sector with maximal harm suffered by the little husbandmans who have faced a loss of around Rs 98 billion, some facing entire obliteration of their harvests.

While on the other manus, Finance Ministry has convened an of import meeting, to reexamine cardinal macroeconomic indexs of the state following desolation of inundations.

Beginnings said that meeting of the Medium Term Budgetary Framework ( MTBF ) being held at Ministry of Finance would reexamine the turn overing marks of cardinal macroeconomic indexs for the following three old ages, which were unveiled in the budget. They recent inundations have changed the economic precedences of the state and budgetary marks have become wholly irrelevant on the face of monolithic supplanting caused by worst of all time inundations in the history of the state. This information is expected to be shared with IMF during negotiations presently underway in Washington that would go on till September 2.

Growth mark of 4.5 per centum for 2010-11 was to make 5 per centum in 2011-12 and 5.5 per centum for 2012- 2013 under the MTBF. Beginnings said that growing mark for the current financial twelvemonth every bit good as for the following two old ages would hold to be revised because of the lay waste toing inundations whose impact on economic system would stay for the following few old ages. Inflation was targeted to be brought down to 9.5 per cent in the on-going financial twelvemonth and 8 and 7 per centum for 2011-12 and 2012-13 severally. These marks have become irrelevant and would be readjusted in position of the present state of affairs ; the same is the instance with gross aggregation marks. The authorities ‘s gross aggregation marks of 15.2 per centum of the GDP for the on-going financial twelvemonth and 15.5 and 15.9 per centum for the following two old ages severally are improbable to be met. ”

Dr. Amjad Waheed, CFA, Chief Executive Officer of NBP Fullerton Asset Management Limited

( Formerly National Fullerton Asset Management Limited ) has written an in deepness article on the state ‘s economic status and has projected the hereafter trends in our economic system.

Highlights are given below.

Entire Losses estimated at 5.8 % of GDP. Approximately 15 % of the Pakistani population has been victimized by the inundations. Harmonizing to some initial estimations agricultural losingss may transcend Rs 250 billion whereas substructure losingss may transcend Rs 600 billion. Thus entire estimated losingss of around US $ 10 billion will be 5.8 %

of Pakistan ‘s GDP.

Economic Growth rate expected to be subdued. We expect agribusiness sector to demo a negative growing, and industry and services sector to turn by approximately 3 % . We project corporate net incomes to lift by 14 % over the following four quarters, down from our old estimations of 18 %

growing.

Fiscal Deficit is expected to balloon to 7.5 % of GDP in FY11. The lag in economic system as a consequence of the inundations will do revenue enhancement aggregation mark of Rs 1.7 trillion highly hard to accomplish. On the other manus, authorities outgos are expected to lift well to re-build the substructure in the floods-affected countries and rehabilitate the accomplished households. Domestic Government adoption in the signifier of Treasury Bills and National Savings Schemes is besides expected to lift well. In the months of July and August 2010, the Government Treasury Bills stock has already risen by about Rs 137 billion. This will besides go on to herd out the private sector. As a consequence, the budget shortage is estimated to traverse 7.5 % of GDP in FY11.

Inflation and Interest Rates are expected to lift farther. The infliction of value added revenue enhancement from October, harm to harvests from inundations, projected rise in public-service corporation monetary values and expected extra revenue enhancements to back up people affected with inundations may ensue in rising prices lifting to around 15 % in FY11.

Stock Market public presentation expected to stay lacklustre in FY11. Floods are expected to hold a negative impact on the banking industry, car industry and oil selling companies, at least in the short tally. In the staying period of FY11 the stock market may non be able to demo a dual digit growing from the current degrees. The Margin Trading System, even if implemented, is non traveling to do a important difference to the public presentation of the Pakistani stock market, in my sentiment, as the economic and political basicss will take clip to better.

Trade and Current Account Deficit are expected to Rise. Pakistan ‘s exports will endure due to damage to the cardinal harvests and fabric sector ensuing from inundations, every bit good as power deficit and high rising prices. Pakistan ‘s imports, on the other manus, are expected to demo an addition due to import of around 2-3 million bales of cotton and nutrient merchandises.

Investors are advised to stay conservative and prefer money market financess relative to equity financess for the clip being.

Consequence on Banks:

“ The Moody ‘s investor services changed the long-run local currency sedimentation evaluations and bank fiscal strength evaluations of the big-5 Bankss from stable to negative, ” said Muniba Saeed, an analyst at Invest Capital, here Saturday. “ The alteration in the mentality of the Bankss was driven chiefly by the impact of inundation giving rise to economic challenges. ”

The nutrient deficit and lifting input monetary values will farther impede the corporate sector ‘s recovery due to the lag in the economic growing and inflationary force per unit areas.

The evaluation bureau expects that higher input monetary values would take to a loss of fight in certain export-oriented sectors, particularly fabrics.

Harmonizing to informations from the State Bank of Pakistan, the banking sector exposure to fabrics as of June stood at eight per cent of the entire exposure, nevertheless, the banking sector exposure to cumulative fabrics and the harvest turning class of agribusiness stood at 11 per cent of the entire, or Rs635 billion.

As fabrics being the highest borrower in the fabrication sector, such dependance are likely to dent the sectors profitableness, owing to increased purveying demand and end point increased chance of the non-performing loans.

The Bankss ‘ non-performing loans ( NPLs ) have grown to an dismaying degree of Rs456 billion by March this twelvemonth on the dorsum of a skiding economic system, harmonizing to the State Bank of Pakistan ( SBP ) . The increasing NPLs are squashing the net incomes of the Bankss, as they are required under the prudential ordinances to do commissariats against their bad debt.

National Bank of Pakistan, the loaner with the highest delinquency ratio, faces an addition in loan failures after the worst implosion therapy in the state ‘s history damaged farming area in countries where the bank lends.

Syed Ali Raza, the bank ‘s president, said in an interview in Karachi, “ There will surely be some impact on non-performing loans. The impact will be containable but it will be at that place. ” He continued, “ While there were immediate losingss from inundations mostly in the agribusiness sector, there is a positive side to the catastrophe as it has refreshed farmland across the state. The output from those farms is likely to better with better, more fertile dirt and handiness of H2O in the following season. ”

Abdul Shakur, a research analyst at BMA Capital Management Ltd. in Karachi said “ With about 25 per centum of its entire loaning to agriculture related concern, it will be a existent challenge for National Bank to register growing in net income, ” He estimates a 22 per centum diminution in National Bank ‘s net income in 2010.

Muhammad Imran, caput of research at Arif Habib Investment Ltd. in Karachi said “ The inundation losingss and the price reduction rate rise may restrict the ability of borrowers to return loans. Banks may be asked to reschedule and ease footings. ”

The cardinal bank said in an e-mailed statement “ Given the likely impact of the recent inundations, ongoing disputing economic environment, power deficits and security state of affairs in the state, the increased portfolio of non- acting loans and heightened recognition hazard remain the major challenge for the banking system. ”