ISLAMABAD (Reuters) - Pakistan’s floods caused an estimated $9.7 billion in damage to infrastructure, farms and homes, the Asian Development Bank (ADB) and World Bank said on Thursday.
An assessment conducted by the two banks said agriculture, which is the mainstay of the economy, and livestock were the worst affected by the disaster, which seriously damaged an already fragile economy.
The floods, which began in late July, made more than 10 million people homeless and affected 20 million.
“The floods that swept across Pakistan since July caused an estimated $9.7 billion in damage to infrastructure, farms, homes, as well as other direct and indirect losses,” the ADB and World Bank said in a statement.
Pakistan’s cash-strapped government, which needs to secure as much aid as possible for reconstruction, has said the floods caused $43 billion in damage.
Besides foreign aid, Pakistan will need to find ways to raise billions of dollars for reconstruction because it may not be able to secure enough foreign financial support.
Pakistan has one of the world’s lowest ratios of taxes to gross domestic product, at about 10 percent.
It could come under pressure from aid groups to address the disparity before large amounts of money flows in during reconstruction, which could take years, and the issue of transparency has also caused concern.
The cost of rehabilitation will probably push the 2010-2011 fiscal deficit to between 6 and 7 percent of GDP against an original target of 4 percent.
The International Monetary Fund (IMF) has sent Pakistan $451 million in emergency funds to help the country rebuild. That sum is separate from a $11 billion IMF-backed economic programme agreed in 2008.
The IMF programme includes energy sector reforms and measures to boost revenue. If Pakistan does not increase its tax revenue and eliminate energy subsidies to cut expenditure, future IMF funds could be in danger.
If aid money does not reach millions of flood victims soon, unpopular Pakistani leaders will lose more credibility, and Taliban insurgents may capitalize on hardship to gain recruits.
The ADB and the World Bank assessed 15 important sectors throughout the country Pakistan and their estimate included direct damage, indirect losses and reconstruction costs.
Reporting by Michael Georgy; editing by Andrew Dobbie