Positive pledges

Prime Minister Shehbaz Sharif has thanked all heads of states and governments, the European Union, the United Nations, and other development partners for making the International Conference on Resilient Pakistan in Geneva a “resounding success”. Some have called the government’s hailing of the pledges made at the conference misplaced optimism at best and misrepresentation at worst. The truth lies in the middle. Multilateral and bilateral donors have pledged $10.7 billion for Pakistan’s flood relief efforts. This is well over the country’s targeted $8 billion flood appeal; and is by all means – especially when combined with Saudi Arabia’s decision to study increasing investment in Pakistan – something to welcome. The pledges and hopes for a positive outcome of the ninth review of the IMF’s seven-billion dollar programme as well as Saudi Arabia’s reported plans would be good news for a country standing on the edge of the economic precipice.

The downside is misplaced optimism. The pledges – details of which are as yet unclear: are they aid, are they loans? – may make us sanguine. But that is a pit the government cannot fall in. Economic and business analysts caution that this is transitory as within six months the country may again be facing budgetary constraints and will likely have to pay billions to retire pending debts; installments of interest payments will also be due soon. If we survive the next six months, it does not mean we are totally out of danger of default. There are at least two more factors – in addition to the donor pledges and the Saudi largesse – and that include the completion of the IMF’s ninth review in Pakistan’s favour and the foreign exchange rate in the country. If donor pledges and Saudi investment materialize and the IMF review is also concluded, the country may be on safer ground to improve investor confidence. Pakistan has had a troublesome year in 2022 with weak investor confidence further impacting the economy. Last year’s disastrous floods caused losses estimated at $30 billion and without foreign help it would be impossible for the country to recover in the coming years.

That said, it is of some relief to see that the world has not forgotten that more than 33 million people were affected in last year’s climate change-induced floods in Pakistan, one of the largest natural disasters due to climate change in recent years. Pakistan’s flood led to damages in billions of dollars, while one-third of its land was submerged under water. Millions of homes were destroyed, thousands of schools damaged, thousands of kilometres of roads network wiped out while hundreds of health units destroyed. According to the UN, these floods pushed about nine million Pakistanis into poverty. People did not just lose their loved ones and their homes, but they also lost all their livelihoods with no hope of getting it back without help from the state and the international community. More people have been pushed into poverty; there is a real healthcare emergency in the flooded regions and the damage to the infrastructure will take years to rebuild. What is now important is also that the government thinks of ways and means to rehabilitate those who were affected by the floods while dealing with food shortage, and other crises. We now have millions of new internally displaced persons, years after we are still unable to settle the war on terror IDPs. This will need a collective effort of the state and the international community. The outbreak of diseases in flood-affected areas is another challenge but one of the biggest challenges at the moment is food security. Credit must be given to Prime Minister Shehbaz Sharif and his team for presenting Pakistan’s case convincingly at the International Conference on Climate Resilient Pakistan in Geneva. But we have miles to go before we sleep.