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Wajid Islam

April 24th, 2023

Debt-Riddled Pakistan: An Unwilling Importer of Climate Damages

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Estimated reading time: 10 minutes

Wajid Islam

April 24th, 2023

Debt-Riddled Pakistan: An Unwilling Importer of Climate Damages

0 comments | 5 shares

Estimated reading time: 10 minutes

Despite Pakistan’s success in creating a ‘loss and damage’ fund at the COP27 Summit in Sharm el-Sheikh in January this year, its peoples continue to suffer from the devastating climate crisis-induced floods of 2022, with a near surety that similar natural phenomena await them in future. Wajid Islam discusses what hopes lie for Pakistan and other such climate vulnerable countries who have had an insignificant carbon footprint on the planet, yet pay a very heavy human and infrastructural cost.

 

Pakistan and other developing countries are unwilling importers of climate damages from the top exporters of the climate crisis — the developed countries. Pakistan, whose greenhouse gas output is a mere 0.3 per cent, bears the heavy brunt of some undone sins. First, the severe drought and heatwaves: the country witnessed regular and constant scorching heat of above 45°C, followed by monsoons and devastating floods that wreaked havoc in the country in 2022. The floods not only inundated one-third of the country but also claimed the lives of 1,730 people, uprooted 33 million people, killed 1.16m livestock, and destroyed precious infrastructure including schools, bridges, roads, health facilities, and community-service buildings.

Perhaps the most worrisome fact is that 2022 was likely not the last time Pakistan will face such a situation. More likely, it is the beginning of the series of devastations confronting the country in coming times; the Global Climate Risk Index (2021) ranks Pakistan among the top 10 countries most vulnerable to the climate crisis. The cost of the 2022 floods is enormous; according to some estimations, the reconstruction will cost between US$28-40 billion. Apart from the financial burden, poverty, hunger, diseases, miseries, and the agonies of millions of displaced and poor peoples is beyond measure. According to the World Bank, the current floods will push about 9 million people below the poverty line.

The attendant food insecurity will complicate matters further, and exacerbate most peoples’ suffering by increasing hunger and malnutrition; the country is facing a serious threat of food insecurity as it has lost a large part of its crops and vegetables to flooding of agriculatural lands. Prices of essential food commodities have skyrocketed; inflation has reached 35 per cent. Experts have also warned that due to the heavy siltation of flood waters, the upcoming production of crops will also be adversely affected, exacerbating food insecurity further, complicated further by the global impact of the Russia–Ukraine conflict.

The most important concern is that the country lacks resources to cope with the issues mentioned above: the impact of the climate crisis has hit the country when its external debt is already worrying about its sky-rocketed external debt of US$100 billion. The government needs at least US$41 billion to repay debt and fund imports in 2023. The bolt from the blue sky hit the country when the floods hit it badly. The Government-led Post-Disaster Needs Assessment (PDNA) estimated that the total cost of the floods is US$30 billion – for which US$15.2 billion in losses and US$14.9 billion in damages are needed. The question is: how will the country finance it?  Is this not a clear case of climate injustice?

Under the current global system, there is no system of climate arbitration. Pakistan will wholly bear the entire financial cost of US$40 billion. The country has only got some US$150 million in relief which is very little, and will not cover even 1 per cent of attributable losses. The floods had also contracted the growth rate to 2 per cent from 6 per cent according to the World Bank. In the wake of the 2022 floods, Moody’s and Fitchdowngraded their ratings of Pakistan, citing ‘higher debt sustainability risks’. The country can clearly not repay its debt, and has unsustainable financial hurdles.

In such a situation, do the rich countries bear some responsibility of the country’s hardships, considering Pakistan itself has no role in causing such calamities on itself? There are several ways in which an international intervention to alleviate this debt crisis can be considered: cancellation or restructuring of debt is the first option, as it will greatly help countries like Pakistan. They have no resources nor capacity to take preventive measures or build the destruction caused by natural calamities. The UN Memorandum states consideration of debt relief so that policymakers can prioritise the financing of its disaster response over repayment of loan. The UN Chief Antonio Guterres has rightly urged world leaders to consider debt reduction for countries facing economic and climate challenges. Debt restructuring and debt swaps will help these countries mitigate the devastation of calamities in the future if investment is made in the climate change-resilient infrastructure.

Perhaps the most reassuring – if also the only – step forward in this direction has been Pakistan’s success in getting the major economies of the world (who have also caused the majority of climate damage) to a ‘loss and damage’ fund for climate crisis-stricken vulnerable countries at the COP27 Summit in Sharm el Sheikh in January 2023. While this is a significant development, its impact will perhaps be too late for those still suffering from the 2022 floods in Pakistan.

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The views expressed here are those of the author and do not represent the views of the ‘South Asia @ LSE’ blog, the LSE South Asia Centre or the London School of Economics and Political Science. 

This blogpost may not be reposted by anyone without prior written consent of LSE South Asia Centre; please e-mail southasia@lse.ac.uk for permission.

Banner image © Assad Tanoli, ‘A Camp in Flood Affected Area in Quetta, Pakistan’, 2022, Unsplash.

 

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About the author

Wajid Islam

Wajid Islam is Lecturer in Economics at Khyber Pakhtunkhwa Technical and Vocational Training Authority (KP-TEVTA) in Peshawar, Pakistan.

Posted In: Pakistan

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