Addressing the Devastation of Pakistan's Floods 2022

The floods that hit Pakistan in August 2022 exacerbated the country's already dire macroeconomic and political situation. Pakistan was already facing significant challenges, including a mounting trade deficit, impending debt service obligations, and dwindling reserves. The exchange rate had depreciated by 24% in the previous year, and inflation had reached a historic high of 27% year on year. Compounding these issues, Pakistan was in the midst of its fifth International Monetary Fund (IMF) program since 2000, which imposed stringent fiscal targets and limited the government's ability to fund unforeseen expenses. Moreover, the $31 billion concessionary capital that could have provided much-needed fiscal space was tied up with the continuation of the IMF program, and the new coalition government, which had ousted the previous government in a vote of confidence, was resistant to the program's strict conditionality. With a general election looming, the government was reluctant to remove the costly energy subsidy, which only added to the country's financial woes.

During the summer of 2022, Pakistan experienced an unprecedented deluge, with U.N. Secretary-General António Guterres noting that "the monsoon was on steroids." In July and August alone, the country received 190% of its typical rainfall, and regions that are normally unaffected by monsoons, such as Baluchistan in the west and Sindh in the south, received a staggering 450% more rain than usual. The excessive rainfall led to the saturation of flood basins, which overwhelmed the natural drainage system and resulted in vast areas of farmland and human settlements being inundated.

The consequences of the floods were catastrophic, with one-third of the country being submerged in water, 15,000 people dead or injured, and 8 million displaced. The damage to infrastructure was extensive, with over 2 million homes, 13,000 kilometers of highways, 439 bridges, and more than 4 million acres of agricultural land destroyed or damaged. Furthermore, an estimated 9 million people are at risk of falling into poverty due to the floods. The economic losses amounted to 2.2% of GDP, with the agriculture sector suffering the most significant decline at 0.9%. The cost of recovery and reconstruction is projected to be 1.6 times the budgeted national development expenditure for the financial year 2023, highlighting the magnitude of the disaster and the long road to recovery ahead.

The immediate response to the devastating floods in Pakistan was to provide much-needed relief to those affected. The government, along with contributions from private citizens and international donors, raised a total of $245 million to provide cash support to 2.2 million households, and hundreds of thousands of tents, food, water, and medicine were distributed to the displaced. In addition to this, the emergency relief fund was increased to $816 million after receiving additional commitments from international donors.

However, it was clear that a massive post-flood reconstruction effort was necessary to prevent long-term adverse impacts on economic growth and the livelihoods of low-income households. To this end, a Post-Disaster Needs Assessment (PDNA) was prepared in collaboration with the United Nations system, the World Bank Group, the Asian Development Bank, and the European Union. The PDNA estimated flood damages to exceed $14.9 billion, with economic losses of over $15.2 billion and reconstruction needs of over $16.3 billion.

In order to address these challenges, the Resilient Recovery, Rehabilitation, and Reconstruction Framework (4RF) were developed, with the key priorities being the revival of livelihoods and agriculture, the rebuilding of private housing, and the reconstruction of public infrastructure, including roads, bridges, schools, and hospitals. Working together with international partners and donors, the Pakistani government is striving to implement the 4RF to ensure a sustainable and resilient recovery from devastating floods.

Meteorologists have attributed the devastating floods in Pakistan to the impact of climate change, which has caused a rise in temperatures, for which rich countries bear responsibility. This issue was brought to the forefront during the COP27 discussions held in Sharm al-Sheik in November 2022. The discussions were influenced by the Pakistan floods and helped bring about the consensus that rich countries must compensate the vulnerable poor countries for the suffering caused by climate change disasters. As a result, the "loss and damage" fund was set up.

Recognizing the urgent need to respond to Pakistan's needs, the International Conference on Climate Resilient Pakistan was hosted by the United Nations in Geneva in January. This conference resulted in a pledge of $10.57 billion by multilateral and bilateral creditors for reconstruction, which exceeded the $8.15 billion that Pakistan was expecting. The Post-Disaster Needs Assessment (PDNA) had estimated that reconstruction needs would be $16.3 billion, with 50 per cent coming from Pakistan's own resources.

The breakdown of the pledge includes $4.2 billion from the Islamic Development Bank Group, $2.7 billion from the World Bank (revised up from $2 billion), $1.5 billion from the Asian Development Bank, $1 billion from the Asian Infrastructure Investment Bank, $1 billion from Saudi Arabia, $345 million from France, $100 million from China, $100 million from the United States, $93 million from the European Union, $88 million from Germany, and $77 million from Japan. This funding will be used to rebuild infrastructure such as roads, bridges, schools, and hospitals, as well as revive agriculture and livelihoods and rebuild private housing.

Accessing concessionary climate funds was a challenging experience for Pakistan even before the floods. Despite accounting for only 0.6 percent of global CO2 emissions in 2018, Pakistan ranked 27th among the world's top CO2 emitters, largely due to polluting technology and a large population. If new initiatives are not taken, annual greenhouse gas emissions are projected to more than triple by 2030. The government believes that any 50 percent reduction below projected baseline emissions should be financed with 15 percent from domestic and 35 percent from international sources.

However, the volume of global concessionary finance is limited. Of the total Climate Finance (C.F.) of $632 billion following the Paris Agreement in 2019-20, only $20 billion was granted to the poorest countries, while $65 billion was concessionary finance by multinationals to East Asian economies. Pakistan found the criteria for accessing concessionary finance to be exceptionally stringent, despite several opportunities for debt swaps, such as switching to clean energy, a massive reforestation program, and upgrading harvesting technology to reduce crop residue burning. The ongoing conflict in Ukraine further complicated the prospects of securing such funds.