Federal Minister for Finance and Revenue Miftah Ismail on Saturday said that the finance ministry estimates losses to the tune of $18.5 billion due to floods, greatly enhancing earlier approximation that put the number to around $10 billion.
Addressing a gathering at the Lahore Chamber of Commerce and Industry (LCCI), Miftah also stressed the government will not let Pakistan's textile mills "stand idle", stressing that damage to the cotton crop means the country will have to enhance import of the commodity.
"Sindh's entire cotton crop has been destroyed," said the finance minister. "We will have to import this cotton. There is no option.
"There is no way we will let our textile mills stand idle. We will supply them with cotton, and also supply gas and electricity, no matter what we have to do.
"The finance ministry's estimate puts the loss at at least $18.5 billion. Two-thirds of Sindh's rice crop has been destroyed, 20% of sugarcane has been destroyed. We have gone through a lot of pain."
The destruction has been caused by floods, led by record torrential rains, that have ravaged Pakistan from north to south, killing over 1,300 people, displacing millions from their homes and causing large-scale infrastructure damage. The country’s agricultural sector has been the hardest hit especially in Sindh and Balochistan, with crops of cotton and tomatoes wiped off.
Miftah said the Pakistan Bureau of Statistics estimates losses amounting to billions incurred on private property. "We will have to rebuild roughly 6,500km of road network, 246 bridges and 1.7 million homes have been destroyed.
"Sindh Chief Minister Murad Ali Shah said if we include mud-homes, then another 3 million have been destroyed."
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Miftah reiterated that if the government had not approached the International Monetary Fund (IMF), Pakistan would have defaulted.
“It was clear to us that going to the IMF was essential, otherwise Pakistan would have defaulted."
Talking about the rising electricity rates, Miftah said that the government has not imposed any new taxes but has passed on the increase in prices of furnace oil and LNG.
“An LNG shipment that cost $34 million is now being purchased at $150 million. The government cannot purchase more LNG anymore,” he said.
Thus far, $10bn losses caused by floods: Miftah
Import LCs
The finance minister also unequivocally said opening letters of credit for "pure" importers that cater to the domestic market was not going to happen.
"Exporters will get their LCs facilitated. But I cannot allow pure importers who sell to domestic audiences to have their LCs opened."
Pakistan has recently moved to be selective in allowing LCs for businesses in Pakistan, in its bid to control the decline of the rupee. It imposed import curbs earlier, banning the inward shipments of luxury goods before removing the ban but with caveats.