Already financially depleted, Pakistan to face additional $4 billion loss due to floods: Report

Pakistan is going through a major catastrophe at the moment. The incessant monsoon rains have caused devastating floods across the landscape. Now, a reportbyJS Global Research has stated that the floods may cost over $4 billion loss to the country, already battling dwindling finances.

“Based on our preliminary estimates, the current account deficit may increase by $4.4 billion (1 per cent of GDP) – assuming no counter-measures are taken, while around 30 per cent of the CPI (Consumer Price Index) basket is exposed to the threat of higher prices,” read the report.

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Moreover, the report cites that owing to the floods, the Pakistani government may be forced to import cotton worth $2.6 billion, in addition to wheat worth $900 million. Add textile losses of around $1 billion and the total comes around to $4.5 billion which is approximately 1.08 per cent of Pakistan's GDP.

“Cotton sowing has reportedly been destroyed to a large extent (in Sindh).Assuming the country requires import of cotton to fulfill 80 per centof demand this year, the import bill will likely exceed USD 4.4 billion (+144 per cent,year-on-year) in FY23," the report added.

Meanwhile, talking about the impact of damaged rice crops, the study added, "Damage to rice crops will result in loss of exports, in addition to a slight reduction in GDP growth and higher CPI inflation.”

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Pakistan's economy is in doldrums

As reported extensively by WION, Pakistan's economy is under tremendous debt and needs cash liquidity on an almost urgent basis.

According to several estimates, India's neighbouring country needs at least $41 billion in the next 12 months to fund debt repayments and boost foreign exchange reserves that have fallen to a lowly sum of $7.8 billion.

If the$4 billion loss, as reported by the research materialises, Pakistan could be staring at a bleak economicfuture.

Read more:Pakistan PM Shehbaz Sharif visits Qatar to raise funds for his cash-strapped country

(With inputs from agencies)

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