Disastrous floods in the province of Sindh have jolted the economy of Pakistan badly and it is estimated that the GDP (gross domestic product) growth rate will fall by 0.5 per cent for the current financial year.
One of a senior official in the Ministry of Finance cited in a background briefing that the country’s weakening economy will further suffer a 0.5 per cent cut down in the estimated 4.2 per cent GDP growth rate due to severe losses by heavy flooding in Sindh this year.
“Floods are estimated to have affected about half a per cent of GDP growth rate, but this needs to be verified,” said the senior official in the Wednesday’s briefing.
The Official also expressed that the government is already working on contingency plans for this loss in the GDP growth rate and a number of solutions are under discussion right now. He told the press reporters that the government plans to raise funds by pledging the national assets, like the Islamabad-Lahore Motorway.
Funds will be raised either by the issue of Islamic Sukuk bonds in the national market and or by domestic Sukuk bonds. As for raising finance by floating $500 million exchangeable bonds in the international market, the world wide debt crisis certainly does not permit it to be done. The official further explained that the international Sukuk bonds raised previously have reached their maturity and the national asset is now free from any legal impediments.
The government is also expecting the proceeds from the sale of the Pakistan Telecommunication Company Limited (PTCL) to Etisalat in UAE this year. Etisalat has withheld $800 million since the acquisition of PTCL in 2008.
“We are hopeful this will materialise this year,” told the senior official about the sale proceeds from UAE’s company.
The government of Pakistan is labouring hard to explore new financial resources to recover the heavy damages done by floods and pledging the motorway is among one of those efforts. Finance Minister, Dr. Hafeez Sheikh, is expected to have negotiations with key international finance proving institutions in Karachi as an attempt to tap in foreign resources very soon. Such poor economic will certainly provide another source to the hyper inflation in the country, raising the prices of daily commodities even higher.