Question about $10 billion flood financing in Pakistan


A father and son remove their belongings from their flooded house in Taluka, Shujabad, Mirpurkhas district. Credit: RDF
  • by Zofeen Ebrahim (karachi)
  • Inter Press Service

“It’s looking for an opportunity to take credit for trying to regain some goodwill,” said Michael Kugelman, director of the Wilson Center’s South Asia Institute, who called the complacent messages purely “political” from a government, which he said was “weak, unpopular and struggling to contain a cascading economic crisis”.

Still, he agreed, the Sharif government deserved full credit for bolstering so much support in an “age of donor fatigue and global economic stress”.

But in his own country, Sharif’s words met with much caution.

Janib Gul Mohammad, a farmer from the village of Fateh Ali Buledi in Kamber Shahdadkot, one of the hardest-hit districts in Sindh province, doubted that he would get even “a rupee of the billions of dollars” he would receive on his behalf.

“Our rulers have no idea how hungry our children are,” said Mohammad, whose family had to ration and reduce their consumption of roti (flat bread) from “two to three to just one at each meal.” He and his family of 13 are among more than 33 million Pakistanis affected by last year’s unprecedented flooding caused by record monsoon rains and the melting of glaciers, which left more than 1,700 dead.

Seven months after the rains began, thousands are still living in open areas, tents and makeshift homes in Sindh and Balochistan, the two hardest-hit provinces ravaged by a cold snap, disease and food shortages that make life even more dangerous. According to the UN, an estimated 5 million people remain exposed to or live near flooded areas. A post-disaster need assessment (PDNA) has estimated the damage at more than USD 30 billion – one tenth of Pakistan’s total GDP.

The moot, attended by officials in Geneva on Jan. 9, drew from more than 40 countries and included private donors and international financial institutions.

Major donors, such as the Islamic Development Bank, pledged USD 4.2 billion; the World Bank USD 2 billion; the Asian Development Bank USD 1.5 billion; the European Union USD 93 million; Germany $90 million USD; China USD 100 million; Japan USD 77m; the United States announced another USD 100 million on top of a similar amount already committed to Pakistan and Saudi Arabia, namely USD 1 billion. In addition, Qatar pledged USD 25 million, Canada USD 18.6 million, Denmark USD 3.8 million, France USD 386.5 million, Italy USD 24 million and Azerbaijan USD 2 million of these funds over the next three years.

Kashmala Kakakhel, an expert on climate finance, recalled that pledges were not pledges and said she would like to see a clear distinction between the new money and one that is being re-bottled to deal with flood impacts, but doubted the government “will ever tell”.

While the multilateral funders have been relatively generous, Kugelman said it could stem in part from “a desire to support the emerging global standard of climate justice.” But by “only offering pledges, not actual help, they’ve given themselves a safety net and a possible way out in case they decide they’re not ready to commit to such large sums,” he said,

Pledges from bilateral donors may seem smaller, Kugelman said, but this may be because they’ve helped before. Following the example of the United States, he said it made one of the smaller pledges at the donor conference, but was one of the most generous bilateral donors since the floods hit.

However, of the $10 billion pledged, there are 8.7 billion loans that the government “easily underestimated,” the Wilson Center expert said. And it could take several years for these to arrive, he added.

Ashafque Soomro, head of the Research and Development Foundation, a Sindh-based non-governmental organization that has been at the forefront of helping flood-stricken communities, isn’t sure getting more loans is a good idea at all. At this critical time of economic crisis, he said, the government should have “built a strong case for climate justice” to get subsidies instead.

“I am deeply concerned that the government is not only forcing us further into a debt trap, but also risks defaulting on repayments.” According to former finance minister Miftah Ismail, Pakistan owes the world nearly $100 billion and must pay back $21 billion to lenders during the current fiscal year. “We have no means to repay our lenders. We will just have to try and borrow from one creditor to pay off another,” he wrote in Dawn.

Nevertheless, Soomro said, they should make every effort to go to livelihood restoration and economic recovery, such as restoring farmland and subsidizing agricultural inputs, when the funds arrive. This, he said, will create employment and prevent an impending food crisis. At the same time, Soomro said, aid agencies must ensure that their money is spent wisely and smartly to mitigate climate catastrophes.

Kakakhel said she was touched by the finance minister’s statement that in order to turn pledges into cash inflows, Pakistan must quickly prepare project feasibility. “Why hold an emergency donor conference at all if you’re going down the same old traditional path of seeking loans?” she asked.

She added: “If 90 percent of the pledges are to be projected anyway, it means that the additional costs associated with climate resilience will also need to be built into project budgets, inflating loan amounts. Whether that will actually happen is anyone’s guess.”

But even if pledges become pledges, Ali Tauqeer Sheikh, a climate expert, wasn’t sure Pakistan could use it all given its “track record of delayed implementation of development projects”. Pakistan, he pointed out, was littered with “more than 1,200 unfinished projects worth Rs 1.6 trillion”.

Therefore, said Dr Fahad Saeed, a climate scientist, the government should not just come up with “well-planned but ready-made solutions, and fast”. He suggested investing in models that streamlined philanthropy and involved the private sector and even startups. Decisions made today, he said, should be supported by research and science. “Drafting policies within power corridors or in five-star hotels will not produce the desired result; we need to get out there, collect evidence and come up with robust solutions to fight climate change.”

Lieutenant General Nadeem Ahmed, former deputy chairman of the Earthquake Reconstruction and Rehabilitation Authority (ERRA), shared a formula he said would be a guaranteed success if followed. “All infrastructure projects can be handled by relevant line departments, while the more people-oriented recovery programs can be carried out by a dedicated special management unit in the province with full autonomy, allowing it to bypass cumbersome bureaucratic processes, procedures and approvals.

“Both systems need to interact and coordinate with each other for the sequencing and prioritization of their respective project areas to ensure that one does not harm the other,” said the retired Army officer, who was also a former chairman of the National Disaster Management Authority.

IPS Report of the UN Office

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© Inter Press Service (2023) — All rights reservedOriginal source: Inter Press Service

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