Pakistan warns flood damage will exceed $10 billion

Pakistan’s foreign minister made an urgent call for international aid, with the death toll from historic flooding across the country expected to rise in the coming days.

Already reeling from an economic crisis, flood waters have submerged over one third of the country in water, killing over 1,000 and impacting 33 million people.

Bilawal Bhutto Zardari, the country’s foreign minister, told CNBC’s Dan Murphy Thursday that he fears the damages from the natural disaster will exceed current estimates of $10 billion, adding that the crisis in the country is still ongoing and in the “rescue and relief phase.”

The flooding, which Bhutto Zardari told CNBC is “a climate disaster of biblical proportions,” covers over 95,000 square miles of land. Bhutto Zardari said the crisis is far from over, as “southern areas of Pakistan are still bracing themselves for the flooding to come through the rivers from the north.” 

“Pakistan at this point in time, are paying in their lives and in their livelihoods for a climate disaster that is not of their making,” he said. Pakistan’s contribution to global carbon emissions is less than 1%, but it’s among the 10 most affected countries in the world by climate change.

The South Asian nation of over 220 million people reported a 27% inflation rate for August, according to government data, and was hit hard by the Covid-19 pandemic. Its currency has tanked while net foreign reserves have dwindled to just $8 billion in August, according to the State Bank of Pakistan.

Political infighting has gripped the country since April, after the ousting of former Prime Minister Imran Khan, who has been charged under anti-terror laws by Pakistan’s police.

Rural areas in Pakistan have been hit the hardest by flooding, which will have a compounded impact on Pakistan’s farming industry, and ultimately the cost of food.

Bhutto Zardari told CNBC “about 80 to 90%” of Pakistan’s crops have been damaged by the floods. The International Rescue Committee report that 4 million acres of crops have been destroyed with 800,000 livestock perishing.

Prior to the disaster, food inflation in rural provinces was much higher compared to urban areas. For instance, the cost of onions in Pakistan’s urban areas increased by 89% from July 2021 to July 2022. In rural areas, that cost increase topped 100%.

The International Monetary Fund on Monday approved the release of $1.1 billion to Pakistan in special drawing rights, a part of its bailout program which began in 2019.

The money was already part of a relief program to help Pakistan stabilize its economy. Pakistan has now launched a joint appeal with the United Nations for about $160 million, which Bhutto Zardari told CNBC “is obviously a very conservative estimate about the bare minimum requirements at this moment.”

Over a million homes have been destroyed, and Bhutto Zardari added that key infrastructure like bridges, road networks, and dams have been damaged. Pakistan going forward, he says, will need “large scale reconstruction, which will require a lot of work.”