The state of the economy is shaky but not unsalvageable according to State Bank reports. Below is a summary of the recent issues and policies under the State Bank
The Friday Times, November 19-25, 2010
Macroeconomic indicators: According to State Bank (SB) reports, the economy showed an improvement in macroeconomic indicators during the 2009-10 fiscal year. The economy grew at a rate of 4.1 percent, compared to 1.2 % in 2009. Other signs for improvement seem to be a decline in annual inflation and current account deficit.
The decline in the current account overshadowed worsening of the financial account and thus allowed the external account balance to record a surplus in FY10 (after a gap of two years). Foreign exchange reserves rose to $16.9 billion by end-June 2010. The combination of declining imports and higher reserves meant that the import coverage improved.
Yet the 4.8 percent depreciation of the rupee during FY10 is a puzzle. According to the Business Recorder (Oct 26) the explanation lies in the fact that the larger part of the financing for the current account deficit was in the form of loans from multilateral agencies (predominantly the IMF), which do not enter the interbank market. Moreover, the SB had also stopped the provision of liquidity for oil purchases, with the interbank market shouldering this additional demand as well.
How did this disaster traverse the whole length of Pakistan, a small journey by no means?
The flood zone in Pakistan is an area larger than England and the numbers are staggering. As of August 16, government figures indicate that 20 million people have been affected and are in dire need of humanitarian assistance. The official death toll on August 20 was 1500, but the actual number of deaths is unknown. After the United Nations launched an emergency appeal for $459 million in aid to Pakistan for the next three months, nearly 70 percent of the requested money has been pledged.
Six million people do not have access to clean water and 3.5 million children are at risk of contracting deadly water-borne diseases. The World Health Organization (WHO) reports that in Khyber Pakhtunkhwa (KPK), acute diarrhoea accounted for 3,807 (17%) of the total patient visits in all age groups and is the leading cause of deaths. Acute respiratory tract infections were recorded in 3,255 (15%) patient visits, while skin infections were reported in 4,122 (19%) of the patients. In Baluchistan, diarrhoea and scabies was responsible for majority of the deaths. In Sindh, acute respiratory infection was the leading cause of consultations followed by skin infection and acute diarrhoea. Suspected cases treated for malaria are rising as more areas with stagnant waters emerge.
The floods began in late July 2010, when unusually intense monsoon rains fell over northern Pakistan. By August 19, about one-fifth of Pakistan was flooded. However, the region is not unfamiliar with floods. Before this disaster, Pakistan has suffered a cumulative financial loss of more than Rs 385 billion (US $6 billion) on account of 15 major floods and before this year the death toll by floods was near 7,800.
On July 28, 2010, Pakistan Meteorological Department’s flood forecasting division sent out warnings of significant floods from River Kabul and its tributaries in North KPK. Flash floods were expected for only 36 hours, but no forecasting could predict the force with which water was being collected and hurled downstream. After this, warnings were issued on all barrages and dams southward.
On July 29, 2010, warnings began from the Tarbela Dam on the Indus, to districts in River Chenab’s proximity and the Mangla Dam on Jehlum. Next in line of the flood was Taunsa Barrage on the Indus, where water swept over Muzaffargarh, DG Khan and Rajanpur on 31 July, 2010. Guddu Barrage near Sukkur was next, and lastly the Kotri Barrage in Sindh, were both placed on high alert on August 5, 2010. The warnings were of minimal advantage, as within 24-26 hours of them, villages were swept away.
Rain has worsened the inundation in South Punjab, while Gilgit-Baltistan is still under heavy threat, with no access by road vehicles. Lower Sindh continues to receive flood threats by the government.
As of August 17, 2010, in the north, the Karakoram Highway (KKH) from Gilgit to Hunza is blocked and in Kohistan four bridges on the KKH have broken. Deforestation in Swat and Gilgit has been blamed for the damage to bridges. The major reason being the dislodging of collected logs, which rolled downstream with the water. It was not only the force of the water but these logs that destroyed many of the bridges.
In Sindh the Indus at Sukkur barrage was at exceptionally high levels on August 18 as shown by the false-colour image (as compared with the same region on August 13, 2001. The plant-covered land is red in the false-colour images and dark blue canals surround the white-gray city of Sukkur). The floods caused the Indus to extend over its banks across many kilometres.
The Kotri Barrage is the final structure before the river empties into the Arabian Sea. The fist recorded surge of water at the barrage is over about 857,860 cusecs*, as of August 22. The river above the barrage is several kilometers wider than normal and embankments or canals are clearly seen containing the flood on the east side of the river north of Hyderabad as can be seen in the NASA satellite pictures. Green farmland can still be seen beneath the blue waters of the river. On August 22, the Pakistan Meteorological Department warned that the villages of Sajawal , Mirpur Bataro, Mirpur Sakro, Jhang Shahi ,Allah Rakhio, Shadad Kot , Jamshoro, Matiari, Makaro, Ketibander, Shahbander in Thatta and Hyderabad districts were under threat.
The National Disaster Management Authority (NDMA) met on August 19, 2010, where the Ministry of Water and Power reported that the eastern rivers—Chenab, Ravi, and Sutlej—were now flowing normally. In addition to that, water was receding throughout the flood-affected areas, with decreasing water levels recorded at the Tarbela, Kalabagh, and Taunsa barrages. Populations in the Thatta region were evacuated due to Kotri still being under threat.
Food still remains in short supply with six million people in need of food assistance. Women are feeling the brunt of it. A UN assessment in KPK found that 37% of women in households surveyed were consuming less food than men, while 50% of households reported having no food for an entire day.
The agriculture sector is in shambles as over 200,000 livestock heads have been lost, in addition to up to 100% poultry losses in some districts. Over 725,000 medium and large animals in KPK alone require emergency feed and veterinary support. Over 3.2 million hectares of standing crops, representing 16% of the cultivatable area, have been damaged or lost across Baluchistan, KPK, Punjab and Sindh. This includes maize, cotton, rice, sugar cane, fruit orchards and vegetables.
*A cusec is a measure of flow rate and is informal shorthand for cubic feet per second (or 28.317 litres per second). So nearly 6.5 million gallons of water per second washed over Sindh at Kotri