By Staff Reporter
ISLAMABAD: Pakistan is scrambling to contain inflation and protect low-income households as devastating floods wreak havoc on its agricultural heartland, threatening to derail a fragile economic recovery.
Record monsoon rains have inundated Punjab and are now spreading to Sindh, imperiling key crops and fueling fears of rising food prices.
Finance Minister Muhammad Aurangzeb, addressing the second meeting of the Steering Committee on Inflationary Trends on Thursday, reaffirmed the government’s commitment to price stability.
“Controlling inflation and ensuring price stability remain among the top priorities of the government, especially to safeguard vulnerable and low-income households, including those affected by recent floods,” he said in a statement.
The prime minister-established committee, tasked with monitoring weekly inflation and coordinating policy responses, assessed food supplies and early crop damage estimates from this season’s unprecedented rains.
The floods, which began in late August, have been catastrophic for Punjab, home to over half of Pakistan’s 240 million people and its main farming region. In a historic first, the Ravi, Chenab, and Sutlej rivers overflowed simultaneously, killing 79 people and submerging nearly two million acres of farmland in the province’s worst flooding in 40 years, according to local officials. As floodwaters move south into Sindh, Pakistan’s second-largest agricultural province, concerns are mounting over damage to cotton, rice, and sugarcane, crops critical to the nation’s textile and food industries.
Economists and traders warn that crop losses and supply chain disruptions could drive up food and overall inflation in the coming months, adding pressure to an economy already navigating a $7 billion International Monetary Fund program that demands fiscal discipline.
The State Bank of Pakistan (SBP), in its mid-year banking sector review released Wednesday, cautioned that the floods could undermine the country’s tentative economic stabilization. While inflation has eased and the rupee has steadied, climate shocks are now a major concern. “Recent torrential rains and flooding could pose some challenges to the economic recovery, and may exert pressures on the fiscal account,” the report said.
The agricultural sector, hit hardest by the floods, faces heightened risks, with farmers reliant on seasonal harvests struggling to repay loans. “The recent heavy floods may weaken the repayment capacity of agri borrowers,” the SBP noted, though agricultural loans account for a small share of bank lending.
Pakistan’s vulnerability to climate disasters is acute. The 2022 “super floods,” which submerged a third of the country and caused over $30 billion in damage, set a grim precedent. This year’s flooding, while less extensive, underscores the nation’s exposure to extreme weather amid ongoing economic challenges.
Aurangzeb’s committee is moving to mitigate the fallout. Officials reported sufficient wheat stocks, with preliminary assessments suggesting manageable damage to rice and sugarcane crops. To curb profiteering, the minister ordered rigorous price monitoring for staples like wheat, sugar, edible oil, and vegetables. “We cannot allow speculation or artificial price hikes to burden consumers,” he said.
Preparations for the upcoming sowing season were also discussed, with an emphasis on ensuring timely access to seeds and other inputs. Aurangzeb instructed the National Disaster Management Authority and the Pakistan Bureau of Statistics to work with provincial governments to finalize accurate crop damage assessments. The committee will reconvene next week to review progress and consider further measures.
Pakistan’s economy faces a hard time. Inflation, though lower than its peak, remains a burden for low-income households, and the floods threaten to intensify food price pressures. The textile industry, a key export driver, could also suffer if cotton production falters. Meanwhile, the IMF program’s fiscal targets loom large, with flood-related costs risking further strain on public finances. The government is betting on swift action to limit the damage, but with floodwaters still spreading and crop losses yet to be fully tallied, the economic outlook remains uncertain.
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