The infusion of $1.16 billion by IMF might help unlock enough cash to get the country through the next couple of years — but the floods themselves have caused more than $10 billion of damage, much of which will end up boosting the country’s $255 billion in debt.
If you’re looking for an emblem of why Pakistan will struggle to recover from the floods that have killed more than 1,000 since June, consider its latest bailout from the International Monetary Fund agreed Monday.
The infusion of $1.16 billion might help unlock enough cash to get the country through the next couple of years — but the floods themselves have caused more than $10 billion of damage, much of which will end up boosting the country’s $255 billion in debt.
For as long as we’ve raised crops from the rich soils laid down in river valleys, floods have challenged humanity. That’s one reason that deluge myths are almost universal.
The solutions haven’t changed much, either. An implausibly massive piece of capital investment saves humanity in Genesis and the Quran, in the form of Noah’s ark.
Modern governments take the same approach. The 1928 Flood Control Act, introduced to tame the Mississippi after the previous year’s devastating inundation, was at the time the largest public works project the US government had ever authorized, costing more than the Panama Canal.
Flood management forms one of the biggest parts of China’s budget, with the 1 trillion yuan ($144 billion) invested in these projects in 2017 (the last time data was published), amounting to a larger sum than was spent on health care or railway construction.
Some of the most important lines of defense against floods are colonial-era projects such as the vast Sukkur Barrage — a system of dams and canals that divert the waters of the Indus’s to irrigate the arid southern Sindh Province. Many are in a poor state of repair, thanks to years of underinvestment in maintenance; corruption; and disputes between Pakistan’s four provinces about the allocation of water and funds.
A changing climate will make the problems Pakistan is experiencing now even worse. Warmer air is able to hold more moisture, making extreme monsoon rainfall a more frequent occurrence. It also causes mountain ice to melt faster — a significant issue in Pakistan, home to more glaciers than any country outside the polar regions. Flash flooding from the overflow of glacial lakes can be devastating, particularly in mountainous regions of the country close to the Afghan, Indian and Chinese borders.
Sufficient expenditure could solve many of these problems at a stroke — but Pakistan is struggling to run up a descending escalator, with energy import dependence, weak agricultural productivity, and lack of external investment contributing to a vicious cycle of underdevelopment.
Even when cash has been made available for nation-building infrastructure (the country was one of the biggest recipients of Chinese funding for Belt and Road projects, much of it spent on hydropower and water management), Pakistan’s exposure to economic shocks has left it ill-placed to pay its way.
Rich countries are reluctant enough to invest in Pakistan’s energy transition, which at least offers the prospect of returns, however meager and uncertain. They’re still less likely to donate the grant funds necessary to insulate one of the world’s poorest countries against the impact of rising global temperatures.
Cash can’t prevent a flood, but it can prevent natural disasters capsizing an economy. Pakistan badly needs that support.
Bloomberg