Billions required for reconstruction of infrastructure

Pakistan’s trade deficit is set to increase because of the destruction caused by the floods.

ISLAMABAD: A total of $5 billion will be required for the reconstruction of damage inflicted to infrastructure because of the floods, according to a report prepared by the American Council on Foreign Relations.

The country also faces the grim possibility of an acute countrywide food shortage since the flood has ravaged millions of acres of agricultural land. The government will be forced to import grains and other commodities to combat the shortage, which will increase the trade deficit and negatively impact balance of payments, the report warned.

Simultaneously, President Asif Zardari’s untimely visit to Europe has succeeded in fostering an enraged reaction within the country.

The report highlighted that the resultant aid for flood victims has been less than satisfactory.

Pakistan’s trade deficit is set to increase because of the destruction. Increased government expenditure in wake of the disaster will result in an hike in the fiscal deficit and inflation is also expected to rise. The report revealed that the GDP growth for the upcoming fiscal year is likely to be 3.1 per cent. It is expected that the floods have reduced the production capacity of wheat and cotton crops by 10 to 15 per cent.

The report also acknowledged that the worst floods in Pakistan’s 63 year history have resulted in the death of 1,600 individuals and affected around 14 million citizens.

Published in The Express Tribune, August 19th, 2010.