Post-flood Pak facing bankruptcy
Pakistan's finance minister has hinted that the country is in dire financial straits and the floods have made matters much worse.world Updated: Sep 07, 2010 02:13 IST
Pakistan's finance minister has hinted that the country is in dire financial straits and the floods have made matters much worse. In a warning to both the civilian and military leadership, the finance minister — Dr Hafeez Shaikh, pleaded that expenditures need to be curbed because the country was "tottering on the verge of bankruptcy."
Earlier this week, President Zardari told a meeting that the IMF's announcement of $1 billion in assistance had saved Pakistan from a default like situation.
Dr Shaikh's warning does not come as a surprise to most economy watchers. Officials said that to make matters worse, export orders were being cancelled by major clients in the West on the assumption that the country would be unable to meet the deadlines.
To offset the costs of flood relief, the government has proposed a controversial flood tax which President Zardari said would be levied on home-owners not affected by floods in Sindh province, the area hardest hit by the floods.
With the failure of the rice crop owing to floods and displacement of the farming population, some analysts fear that the country may be looking at large-scale riots if the issue of housing and food are not addressed.
But there are some who are optimistic. "When a flood takes, it also gives back," says Taj Haider, the government's point man on the floods.
Haider says that the flood have revitalized large tracts of land and he forsees a bumper wheat and cotton crop in the coming season.