Reconstruction of Pakistan’s infrastructure, farms and homes damaged by floods will cost an estimated US$9.7 billion, an Asian Development Bank (ADB) official said on Thursday.
Agriculture, transport and communications were hit hardest by one of the worst natural disasters in Pakistan’s history, said Juan Miranda, director general of the ADB’s Central and West Asia department.
The ADB and the World Bank have conducted an assessment of the floods, which began in July and killed about 1,960 people, made more than 10 million people homeless and affected 20 million.
“We have US$9.7 billion in needs,” Miranda told reporters.
Pakistan’s cash-strapped government, which needs to secure as much aid as possible for reconstruction, has said the floods caused US$43 billion in damage.
Pakistan may struggle to manage billions of dollars of financial support needed for reconstruction.
The government is often preoccupied by crises such as feuding politicians, Muslim militant suicide bombings and showdowns with the Supreme Court.
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
Besides foreign aid, Pakistan will need to find its own ways to raise billions of dollars for reconstruction because it may not be able to obtain enough foreign financial support.
Pakistan has one of the world’s lowest ratios of taxes to GDP, at about 10 percent.
It could come under pressure from aid groups to reduce the disparity before large amounts of money flows in during reconstruction, which could take years, and the issue of transparency has also caused concern.
“We need to be sure we have the right reconstruction plan in front of us and, number two, that we ensure that this is going to be done transparently and efficiently and quickly,” Miranda said. “And number three that we don’t lose out on the reform agenda just because we have the reconstruction effort.”
The assessment by the two banks was made public at a Friends of Democratic Pakistan gathering in Brussels.
The IMF has sent Pakistan US$451 million in emergency funds to help the country rebuild. That sum is separate from a US$11 billion IMF-backed economic program agreed in 2008.
The IMF program 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.
Estimates for economic growth this year range from zero to 3 percent, compared with the official target of 4.5 percent, with the US, which has provided the most aid, worried that a weak economy could destabilize an important ally in its campaign against militancy.
The ADB has said it would extend a US$2 billion assistance package to Pakistan to help repair damage from floods.
Miranda said the floods caused about US$5 billion in damage to agriculture, including crops that were damaged and cannot be replaced. Replacement of crops will require US$900 million.
Rebuilding transport and communications will cost US$2.3 billion, followed by housing with a price tag of US$2.2 billion.
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