Pakistan will ask international lenders for billions of dollars in loans after devastating floods exacerbated the country’s economic crisis, the Financial Times reported on Wednesday.
“We are not asking for any kind of measure [such as] a rescheduling or a moratorium,” Prime Minister Shehbaz Sharif told the FT. “We are asking for additional funds.”
The country needs “huge sums of money” for “mega undertakings” such as rebuilding roads, bridges and other infrastructure damaged or washed away, the FT quoted Shehbaz as saying.
The prime minister did not specify the amount Pakistan is seeking, but repeated an estimate of $30 billion of flood losses, the report said. “There is a gap – and a very serious gap – which is widening by the day between our demands and what we have received,” he said.
Earlier this month, the United Nations raised its humanitarian aid appeal for Pakistan five-fold to $816 million from $160m, as a surge in water-borne diseases and fear of growing hunger pose new dangers after the unprecedented floods. The European Union also scaled up its flood assistance to 30m euros.
A decline in the Pakistani rupee is also pushing up the cost of imports, borrowing and debt servicing, and will further exacerbate inflation already running at multi-decade highs. The estimated $30bn in damage to the economy from the floods along with rising concerns about Islamabad’s ability to raise money to meet external financing requirements has worsened the situation.
Shehbaz also hinted that the failure of the international community to rally resources risked fuelling political instability in the nuclear-armed state, where opposition leader Imran Khan has been capitalising on widespread discontent.
The Pakistan Tehreek-e-Insaf party on Sunday won six out of eight seats up for grabs in by-elections held in three provinces. Analysts said the results bolstered the ousted prime minister’s demand for early elections. “We are obviously concerned because if there is dissatisfaction leading to deeper political instability and we are not able to achieve our basic requirements and goals, this can obviously lead to serious problems,” Shehbaz said. “I’m not saying it in terms of any kind of threat, but I’m saying there’s a real possibility.”
“We are only asking for climate justice, we are not using the word ‘reparations’ at all,” Shehbaz said. He said Pakistan had been tapping state coffers to help displaced families and buy provisions such as tents, medicine, food packs and drinkable water. “We are in a war against climate change-induced havoc, and we have become a victim,” Sharif said. “Tomorrow another country can and we don’t want that to happen.”