Pakistan floods fuel ‘back-breaking’ inflation; UN appeals for $160m help

LAHORE/WASHINGTON: Catastrophic monsoon floods in Pakistan have sent food prices skyrocketing, putting many staples out of the reach of the poor as the cash-strapped nation battles shortages. The floods have submerged a third of the country, killing more than 1,100 people and affecting over 33 million. Recovery could cost more than $10 billion, according to the planning minister. The rains-which began in June, and whose unusual intensity has been blamed on climate change-have also damaged vast swathes of rich agricultural land and crops. Parts of the mountainous north and breadbasket south have been cut off because roads and bridges have been washed away.

“Things are so expensive because of this flood that we can’t buy anything,” said Zahida Bibi, who had come to a market in the central city of Lahore to get vegetables for dinner. She told AFP she had to forego some items on her shopping list because inflation had put them out of reach. “What can we do? We don’t make enough money to buy things at such high prices.”

Onions and tomatoes-common ingredients in most Pakistani meals-have been affected the most. The prices of both had increased by 40 percent, the Pakistan Bureau of Statistics said Friday. But on Monday, Finance Minister Miftah Ismail said the price of onions had shot up by more than five times, and that the government was trying to quickly implement policies to stabilize food prices-including importing from arch-rival India. “We need to consider getting some vegetables over the land border,” he told broadcaster Geo News. “We have to do it because of the kind of prices and shortages we are experiencing… Inflation has broken people’s backs.”

Out of reach

With millions of acres of farmland still under water and certain roads inaccessible, prices are expected to climb further. “About 80 percent of the tomato crop in Pakistan has been damaged in the floods, and onion supply has been badly hit as well,” Shahzad Cheema, secretary of the Lahore Market Committee, told AFP.

“These are basic items, and ultimately it is the average buyer who will be most affected.” Vegetable seller Muhammad Owais at a market in Lahore was struggling to find buyers at the current high prices. “Prices have increased so much because of (the flood) that many customers leave without buying anything,” he told AFP.

Pakistan was struggling with record high inflation even before the floods, because of rising global oil prices and a balance of payments crisis. The government found some room to manoeuvre Monday when the International Monetary Fund approved the resumption of a massive loan program for Pakistan, releasing $1.1 billion immediately.

UN appeal

The United Nations and the Pakistani government launched an emergency appeal for $160 million on Tuesday to help those hit hardest by the floods devastating the country. The funds will provide 5.2 million of the worst-affected and most vulnerable people with food, clean water, sanitation, emergency education, protection and health support, UN Secretary General Antonio Guterres said, calling the disaster a “colossal crisis”.

“Pakistan is awash in suffering. The Pakistani people are facing a monsoon on steroids-the relentless impact of epochal levels of rain and flooding,” he said in a video statement. The aid, covering the initial six months of the crisis response, will help to avoid outbreaks of diseases such as cholera, and to provide nutrition aid to young children and their mothers.

It will also provide assistance to refugees and facilitate schemes to reunite families separated by the disaster. “The people of Pakistan urgently need international solidarity and support,” Jens Laerke, spokesman for the UN humanitarian agency OCHA, told a press briefing in Geneva.

He said some 500,000 people displaced by the floods were sheltering in relief camps, with many more temporarily staying with host families. Around 150 bridges have been washed away, he said, and 3,500 kilometers (2,175 miles) of roads damaged in flooding and landslides, hampering access. “The heavy rains are forecast to continue and with many dams and rivers already at flood levels, the flooding is likely to get worse before it gets better,” Laerke said.

Meanwhile, the IMF board on Monday approved an agreement to revive a massive loan program for Pakistan, as the country grapples with devastating monsoon flooding that has worsened an economic crisis. The Washington-based crisis lender will release $1.1 billion to the country immediately, and has added an additional $500 million to the total size of the package, bringing it to about $6.5 billion.

In addition, the International Monetary Fund agreed to the government’s request to extend the package through June 2023. The original $6 billion bailout package was signed by former prime minister Imran Khan in 2019, but repeatedly stalled when his government reneged on agreed reforms on subsidies and failed to significantly improve tax collection.

The aid comes as “Pakistan’s economy has been buffeted by adverse external conditions, due to spillovers from the war in Ukraine, and domestic challenges,” said IMF Deputy Managing Director Antoinette Sayeh in a statement. “Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances and lay the foundation for inclusive and sustainable growth,” she said.

The government reached an agreement with IMF staff last month to restart the suspended aid package. The new agreement follows months of deeply unpopular belt-tightening by the government of Shehbaz Sharif, who took power in April and has effectively eliminated fuel subsidies and introduced new measures to broaden the tax base. – AFP

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