SUPP ASSESSMENT

HI5003 FINAL ASSESSMENT T1 2023
CASE STUDY

PAKISTAN 2022 FLOODS AND FOOD CRISIS
Food retail to Pakistan, by the Australia Trade and Investment Commission

https://www.austrade.gov.au/australian/export/export-markets/countries-and- economies/pakistan/industries; cited March 6, 2023

Trends and opportunities
The market
Pakistan is a growing market for premium, imported food products. The A$3.1 billion fast-moving consumer goods (FMCG) sector is dominated by in-country brands, but premium retailers in Pakistan carry a large number of imported food products from the UK, US, Thailand, Europe, Indonesia, Sri Lanka, China and Malaysia. This demonstrates existing demand for high-quality products – for which consumers are prepared to pay a premium. Attitudes to food brands are changing. Pakistanis are travelling more – for business, leisure and study – and this is triggering an increased appetite for foreign brands. A rising middle class is also showing a preference for premium products and a taste for new shopping experiences, including Pakistan’s first retail malls. Demographics plays a role – approximately 60 per cent of Pakistan’s population of 208 million is aged under 30. Access to overseas brands is becoming easier. The dominance of traditional grocery outlets is being eroded as modern supermarket chains become established in Pakistan’s principal cities, especially Karachi, Lahore, Faisalabad and Rawalpindi. Today, Pakistan’s A$1.9 billion (PKR 205.9 billion) modern grocery sector is growing at over 20 per cent, per year

Key trends

Two new arrivals are driving change in Pakistan’s food retail market: supermarket chains and e- commerce. Both are helping to transition Pakistan from traditional to modern grocery, as characterised by the breadth of products, the elimination of independent distributors and customers who bulk buy. Growing at approximately A$280 million (PKR30 billion) per year, modern grocery was worth A$1.9 billion (PKR205.9 billion) in 2018.

Following the success of Imtiaz Supermarkets, Alpha stores plan to introduce the UK’s Tesco house brands across the country. Galaxy International has introduced the SPAR retail chain in Karachi and plans to add another two in Punjab province in 2019. The French retailer, Carrefour, is becoming an anchor stall for new shopping malls. Currently a novelty, these shopping malls are extending across Pakistan. Pakistan’s e-commerce industry is currently small (A$30 million) but has the

potential to grow extremely fast. While the size of the online grocery market is difficult to gauge, there are currently over 20 e-grocery stores operating in Pakistan [4], most of which are startups. Typically, groceries are categorised into packaged or perishable items that include fresh produce (fruit and vegetables). Based on the growth of the e-grocery sector in other countries, Austrade anticipates online purchases will gradually extend into dairy, such as UHT milk and cheese, as well as cereal, honey, confectionery and sauces.

Tariffs, regulations and customs

Pakistan imposes high import duties on most foodstuffs. There is anecdotal evidence that some wholesalers import food products from Dubai through channels that enable them to evade full custom duties and charges. This may impact the competitiveness of some Australian products entering Pakistan. It should be noted that Pakistan has very few trade agreements, the exceptions being agreements with China, Malaysia and Sri Lanka.

New packing rules may also impact exporters. In February 2019, Pakistan introduced new regulations for food packaging and product shelf-life that require:

1. A minimum 66 per cent shelf life at the time of clearance of goods
2. Labelling of nutritional values and usage instructions in Urdu and English
3. Reporting of the certifying ‘halal’ authority in the country that validates the product. [4]

For some exporters, halal certification requirements may prove onerous, since the certifying authority must be a member of the International Halal Accreditation Forum, or the Standards and Metrology Institute for Islamic countries. Existing regulations that each food pack must display the date of production and date of expiry have been retained. In addition, labelling requirements are subject to volumes meeting minimum order quantity (MOQ) requirements.

The retail industry recognises that meeting new labelling requirements may make small shipments uncompetitive. Currently, importers are trying to convince the government to relax the new rules, and are asking the government to introduce them over a two-to three-year period.

Distribution

Pakistan has a well-established FMCG distribution system. Three distributors – Udl, Premier and UDL Distributors – cover the whole of Pakistan, while many others operate in small, regional areas. Smaller operators are generally independent and typically charge a fee for product distribution. Their employees take orders from shops and institutions, deliver the orders and collect payment. They also ensure products gain shelf space and are not displayed after their use-by date. Distributors may also re-distribute products with an approaching expiry date to avoid loss from date expiry.

In Pakistan, distributors play a major retail role. Distributors develop the brand and promote it in both wholesale and retail markets. Some distributors own delivery vehicles, which travel between shops and service them. Others adopt a hybrid system, where fellow distributors manage some outlets for products they have imported, especially in small cities. Austrade can connect Australian suppliers to the market and work with importers, supermarkets and Australian suppliers to carry out promotional activities for Australian food and beverages.

Pakistan devastating floods cause Sensitive Price Index to peak at 44.58%. By Business Standard, August 27, 2022 18:20 IST https://www.business-standard.com/article/international/pakistan-devastating-floods-cause- sensitive-price-index-to-peak-at-44-58-122082700624_1.html.

According to State Bank of Pakistan, Sensitive Price Indicator is designed to assess price movement of essential consumer items at short intervals, on weekly basis, so as to take corrective measures. The floods in Pakistan that started in June 2022 increased the prices of petroleum products which further resulted in a spike in the Sensitive Price Index to a record high at 44.58 per cent indicating at skyrocketing inflation in the country. According to the State Bank of Pakistan, the Sensitive Price Indicator (SPI) is designed to assess the price movement of essential consumer items at short intervals, on weekly basis, so as to take corrective measures. The Sensitive Price Index has broken all records and it currently stands at the highest level in history. According to Pakistan’s local media outlet, The Nation, during the last week, the weekly inflation rate in the country increased by 1.83 pc to reach a record high level of 44.58 pc.

Of the total 51 essential commodities, prices of 23 increased last week, while that of only seven decreased and 21 remained unchanged. Moreover, as per a report issued by the Pakistan Bureau of Statistics on Friday, the prices of 23 essential commodities have increased in just one week ending on August 25, 2022. Among the items that have become expensive, the price of tomatoes increased by 43.09 pc, onion by 41.13 pc, potatoes by 6.32 pc, eggs by 3.43 pc, garlic by 2.23 pc, dry milk by 1.53 pc, dal mash by 1.12 pc, cigarettes 2.26 pc and LPG 1.95 pc. The items whose prices dropped include dal masoor which fell by 1.18 pc, vegetable ghee by 1 pc, cooking oil by 0.51 pc, sugar by 0.07 pc and mustard oil by 0.07 pc.

According to the PBS statistics, in terms of the decimal point of the sensitive prices on an annual basis during the last week, the inflation rate for the group with an income up to Rs 17,732 per month was 37.54 pc, the group having income from Rs 17,733 to 22,888 rupees per month – 43.51 pc, Rs 22,889 to Rs 29,517 per month – 41.97 pc, Rs 29,518 to Rs 44,175 per month – 41.90 pc and the group with a monthly income above Rs 44,176 – 45.28 pc, as per the media portal. Meanwhile,

Pakistan’s economy is slowing to around 3.5 per cent due to weakening economic conditions and the average inflation rate peaked at nearly 20 per cent by the end of the current fiscal year, according to the International Monetary Fund (IMF).

Citing sources, The Express Tribune reported that during talks for the completion of the 7th review of the bailout package, the global lender significantly revised its projections for the current fiscal year compared with the assessment that it had made at the time of the last review.

The IMF has shaved Pakistan’s previous year’s economic growth forecast by 1 per cent to 3.5 per cent. Meanwhile, the State Bank of Pakistan in this week’s monetary policy statement had said that the floods caused by unusually heavy and prolonged monsoon rains created downside risks for agricultural production, especially cotton and seasonal crops, and could weigh on growth this year.

Pakistan is grappling with a worse economic crisis and the deepening political turmoil is spawning doubts about the government’s ability to make tough decisions going forward and tackle the longstanding structural issues of the economy responsible for the recurring balance-of-payments crisis.

Amid this, the Pakistani citizens are taking their financial woes online and criticizing the country’s Prime Minister Shehbaz Sharif and Pakistan Muslim League Nawaz (PML-N) top leader Maryam Nawaz for doing nothing for the relief of the masses. Recently, a video of a Pakistani woman surfaced, describing the skyrocketing prices of medicines, groceries and electricity in the country, especially in Karachi city and slamming Prime Minister Shehbaz Sharif and PML-N leader Maryam Nawaz. The video was shared by Pakistani journalist Hamid Mir in which a woman identified as Rabia from Karachi could be seen slamming the government after skyrocketing inflation. The woman asks the government whether she should end her children’s lives by not feeding them anymore, The News International reported.

PAKISTAN FLOODS 2022
God, come help us’: Pakistan families still hungry and homeless six months after floods
Forced to endure a ‘humiliating’ life in tent cities, waiting for stagnant waters to recede, villagers say they have been abandoned; by Shah Meer Baloch in Dadu

Several times a week, Manzoor Ali wakes with a faint hope in his heart and walks from the camp on the outskirts of Dadu, where he and his family have been living since September, to Noorang Chandio, his village an hour away. Each time, he looks to see if the flood water has receded. Each time, he returns disappointed. This has been Ali’s routine since catastrophic floods hit Pakistan last year. “We lost everything,” says the father of 10. “We can’t go back now as our homes are

still flooded and villages are inundated. Officials write down our names but they never come back with any help. “Some families in other villages who could afford it had the water drained from their homes. They have gone back. We can’t afford it.”

Pakistan experienced its worst-ever flooding last year when three months of heavy downpours submerged about a tenth of the country. The UN called it a climate catastrophe. At least 33 million people were affected, the government said. More than 1,700 people died. In most areas, the water has receded leaving much damage behind. But in the worst-affected areas – Sindh, where Dadu is located, and Balochistan provinces – stagnant flood water remains across vast swathes of

land. At least 1.5m hectares (4m acres) of agricultural land were destroyed, leaving 15 million people short of food and estimated financial losses of between $30bn and $35bn (£25bn and £30bn). International banks and donors have pledged more than $9bn to help rebuild the country.

The tent city in Khairpur Nathan Shah, Dadu district, Pakistan, where Manzoor Ali and more than 50 families are still living

in camps months after the floods. Photograph: Shah Meer Baloch

When Noorang Chandio was flooded in August, Ali joined other families taking refuge on the 50km- long Superio embankment in Dadu. For weeks, about 2,000 people perched there in makeshift shelters on the raised strip of land, which was then only accessible by boat. When we see rain, we pray to God it should stop. We are tired of this life

Nearby roads have now re-emerged but murky green, pungent water remains, covering acres of the cotton fields. Most surviviors, including Ali’s family, now live in tents in a camp set up by the Sindh authorities. But life is not easy. “It rained yesterday, and the water was flowing into our camps. We were shivering from the cold all night. When we see rain, we pray to God it should stop. We are tired of this life,” says Badal Chandio, whose tent is next to Ali’s.

Manzoor Ali, right, with his neighbour at the camp, Badal Chandio, who is holding his son. Photograph: Shah Meer Baloch.

Both men now sell buffalo dung to make ends meet and say the only financial support they received was a one-off cash payment of 7,000 rupees (£21) from the federal government’s Benazir Income Support Programme. For the past month, Ali and Chandio say there has been no food distribution from any of the relief workers or NGOs. “We can’t leave our women behind in camps and go for work in other big cities, such as Karachi. We are worried for their safety in the camps,” says Chandio.

Hawwa (she goes by only one name) says it is a humiliating life. “There is no food or help. We have been given no blankets. We’re having a harsh winter, and have been living in camps without any facilities. We are poor. We can’t afford to rent another home, otherwise we could have done it to leave this humiliating life.” Hawwa received the 7,000 rupees payment but that has not been nearly enough to cover her son’s healthcare costs. Last month, he was admitted to hospital with typhoid. “Medicines need money and no one is helping here. We ask God to come and help us.”

For many, going back to dilapidated homes surrounded by stagnant water has been preferable to living by the side of a road or in the camp. Others have put up tents in the grounds of what were once their homes. Ghulam Rasool, a labourer in his 70s, returned to his village from the camp in Dadu in December. He found his house still surrounded by flood water. Metal support posts from the roof had been stolen. He used cattle dung and plastic that was floating in the water to patch up

the roof.

“The floods have affected everyone but the impact is on the poor and labourers more than anyone,” says Rasool. “They don’t have anyone in the government. They don’t have any voice here. Rich and powerful people are getting money and all the help.” Rasool says he has heard many stories of corruption in the province. In September, hundreds of tents and other rations intended for flood victims were discovered by police in a warehouse in Qambar Shahdadkot district, which borders Dadu. Some local officials were arrested but no one has been charged.

Ghulam Rasool, 72, stands with his son and grandchildren in front of the ruined home they are trying

to repair without any state help. Photograph: Shah Meer Baloch

“The international community should get involved in rehabilitation and construction work so that we,

the poor, benefit as well,” says Rasool. One of Rasool’s neighbours, Mohammed Siddique, a father of

seven, agrees. Wading barefoot through water towards his home, he says: “It was impossible to live in

tents. I came back to my home, but I have to cross water to get to it. I have begged the district

administration to clear my path to home but no one is helping here. The government has abandoned us

… our politicians just remember us during the election.”

Mohammed Siddique, followed by some of his seven children, makes the perilous journey to his

home. He has ‘begged’ for help in draining the contaminated water. Photograph: Shah Meer

Baloch

Mushtaq Ahmed, a shopkeeper, says poverty is rising. He has seen a 75% drop in customers at his

shop. “People don’t have money. Most of the area is dependent on farming, and people have lost

their fields and agricultural crops so they can’t afford to make ends meet.”

Banks and countries pledge over $9bn to rebuild Pakistan after catastrophic floods

There has also been a rise in crime. In January, dozens of people blocked the Indus highway

between the cities of Dadu and Sukkur after armed robbers left a man dead. Protesters, who feel

they have been left at the mercy of criminals, chanted slogans against the police and Sindh

government. “Since the floods we have seen a rise in crime. Thieves break into homes in villages

and steal buffalo and livestock at gunpoint, even during the day,” says Allah Baksh, who joined the

protest on the highway after his own home was broken into by robbers. “Not a single day passes without reports of robberies from flood-affected villages and districts. The government has abandoned us and left us at the mercy of thieves and robbers. What can we do except to close the roads, protest and cry for justice?”

Pakistan Ministry of Planning Development & Special Initiatives (Extract highlight)

Pakistan Floods 2022: Post-Disaster Needs Assessment: An extract highlight

Abbreviations

Summary of Damage, Loss, and Needs
Humanitarian Response to Recovery and Reconstruction
The scale and prolonged period of the ongoing disaster requires strategic coordination to effectively link and transition from humanitarian response to recovery. The humanitarian response has been led by the Government of Pakistan, which established a National Flood Response and Coordination Centre (NFRCC) to oversee the national response to the monsoon rains and floods. The NFRCC comprises representatives of federal stakeholders, provincial governments, and the Pakistan Armed Forces. National-level government assistance is organized through the NFRCC. The Armed Forces and civil administration have been providing search and rescue, logistics, and engineering support, while the NDMA is procuring relief supplies and coordinating bilateral in-kind donations for distribution through the Army, which has been mobilized under constitutional provisions.

Relief efforts have largely focused on the provision of shelter, safe drinking water, food items, and health interventions amidst supply chain disruptions. On August 19, the government launched a PKR 37.2 billion flood relief cash program for 1.5 million affected families. On August 30, the Government of Pakistan and the United Nations jointly launched the 2022 Pakistan Floods Response Plan (FRP), which highlighted the main humanitarian needs and outlined an action plan to respond to the immediate needs of the people. A Revised FRP was released on October 4, appealing for US$816 million to cover the most urgent needs of 9.5 million people. However, as of October 21, only 13.7 percent of the requested amount has been funded. The international

community and local and international organizations have provided aid, but accessibility due to standing flood waters, flood effects, and complex topographies remain a major challenge. The Asian Development Bank (ADB), the European Union (EU), the United Nations (UN), and the World Bank (WB) have supported the Government of Pakistan to conduct this Post-Disaster Needs Assessment (PDNA) to provide an initial estimate of damage, loss, and recovery and reconstruction needs from the disaster.

The total damage is estimated at PKR 3.2 trillion (US$14.9 billion), total loss at PKR 3.3 trillion (US$15.2 billion), and total needs at PKR 3.5 trillion (US$16.3 billion). The sectors that suffered the most damage are housing at PKR 1.2 trillion (US$5.6 billion); agriculture, food, livestock, and fisheries at PKR 800 billion (US$3.7 billion); and transport and communications at PKR 701 billion (US$3.3 billion). The transport and communications sector has the highest reconstruction and recovery needs at PKR 1.1 trillion (US$5.0 billion); followed by agriculture, food, livestock, and fisheries at PKR 854 billion (US$4.0 billion), and housing at PKR 592 billion (US$2.8 billion). The provinces of Sindh and Balochistan account for approximately 50 percent and 15 percent of recovery and reconstruction needs, respectively.

Damage

Loss

Needs
(Billion PKR) US$)

491 2,286 168 780 160 746

1,688 7,860 975 4,540 10 48 3,493 16,261

Region (Billion PKR)

Balochistan 349 Khyber Pakhtunkhwa 201 Punjab 111 Sindh 1,948 Cross-Provincial12 587 Special Regions13 7 Grand Total 3,202

(Million US$)

1,625 935 515 9,068 2,731 32 14,906

(Billion PKR)

541 141 122

2,444 14 11 3,272

(Million US$)

2,516 658 566 11,376 67 49 15,233

(Million

Note: All estimates in this report were calculated in PKR and converted to US$ prior to rounding (US$1 = 214.8 PKR on average between June and September 2022). The costs are initial estimates and variances may exist due to limitations such as data access due to ongoing flooding and lack of baseline information. Precise numbers before rounding are provided in the sector assessment reports in the Supplemental Report, published separately.

While the needs estimate accounts for a build back better premium, it does not comprehensively include new and broader investments needed to strengthen Pakistan’s adaptation to climate change and overall resilience to future climate shocks, or reconstruction needs of affected private entities.

Floods Macroeconomic and Human Impact:
A Cascading Crisis
The floods are expected to have a substantial negative impact on Pakistan’s economy. Overall damages are estimated at PKR 3.2 trillion (US$14.9 billion), equivalent to 4.8 percent of fiscal year (FY)22 gross domestic product (GDP). Among the economic sectors, the agriculture and industry sectors are estimated to each incur around one-quarter of the damages, and the services sector is bearing close to half of the total damages. Recovery and reconstruction needs are projected to be sizable at 1.6 times the budgeted national development expenditure for FY23.15

Economic activity has been disrupted, livelihoods have been severely impacted, with poverty expected to increase significantly. The size and duration of shocks will vary across locations and households depending on the intensity of the flooding and the time it takes for the water to recede, their existing socioeconomic status, as well as the quality and speed of relief and reconstruction efforts. Even in the best-case scenario, reversing these negative shocks to household welfare will take considerable time, and some losses, such as losses to human capital and loss of land productivity, could set in motion more durable declines in welfare and will require specific attention. The government is providing immediate relief to the impacted communities and supporting the early recovery, while aiming to ensure macroeconomic stability and fiscal sustainability. Moving forward, as recovery and reconstruction spending rises, the loss in output could be mitigated. Yet, significant international support will be needed to complement Pakistan’s own commitment to increase domestic revenue mobilization and save scarce public resources, and to reduce the risk of exacerbating macroeconomic imbalances. Evidence from previous natural hazards in Pakistan suggests that economic impacts may persist for an extended period, with damage to the productive capacity of the economy reducing growth prospects over the medium term.

Overall decline in GDP as a direct impact of the floods is projected to be around 2.2 percent of FY22 GDP. Among the major sectors, agriculture sector value added is projected to decline the most at 0.9 percent of FY22 GDP, with floods causing the most losses to cotton, dates, sugarcane, and rice crops. Around 1 million livestock are estimated to have perished. Furthermore, damage in the agricultural sector is expected to have spillover effects on the industry and services sectors. Flood-related cotton losses are expected to weigh on the domestic textile industry, as local cotton constitutes about half of the industry’s required cotton input. Textiles account for around one-quarter of total industry output and more than half of goods exports. Similarly, the local food processing and slaughtering industries will be

negatively impacted by the expected reduction in food harvests and reduced supply of livestock. Industry sector value added is consequently expected to shrink by 0.7 percent of FY22 GDP. Similarly, lower agricultural and industrial activity are likely to weigh on wholesale and transportation services activities, which account for around half of the service sector output. In addition, transportation challenges arising from the loss of critical infrastructure, such as roads and bridges, are expected to disrupt supply and further dampen overall economic activity. Services sector value added is consequently projected to decline by 0.6 percent of FY22 GDP.

Executive Summary

The disaster will have profound impact on lives and livelihoods. Preliminary estimates of the PDNA suggest that the national poverty rate will increase by 3.7 to 4.0 percentage points, pushing between 8.4 and 9.1 million people into poverty, as a direct consequence of the floods. Similarly, multidimensional poverty will increase by 5.9 percentage points, meaning that an additional 1.9 million households will be pushed into non-monetary poverty. Beyond the national average, poverty in Sindh would increase by between 8.9 and 9.7 percentage points, and in Balochistan by between 7.5 and 7.7 percentage points. Moreover, the depth and severity of poverty will increase for households that were already poor prior to the floods. The poverty gap has substantially increased, with the number of extremely poor people living more than 20 percent below the poverty line increasing from 18 to 25–26 million. The impact on household welfare will come through at least four channels: (i) loss of household income and employment/livelihoods due to destroyed harvest, killed livestock, or inactivity of businesses; (ii) loss of assets, including homes, livestock, productive equipment, and household durables; (iii) rising food prices due to shortages of food arising from lost food stocks and poor harvests; and (iv) loss of human capital, given the significant threat of disease outbreaks and food shortages, and prolonged school closures, with attendant learning losses.

Even prior to the flooding, many of the calamity-hit districts showed higher monetary and non-monetary deprivations, especially among households in rural areas. Nineteen of the 25 poorest districts in the country were calamity-affected. Moreover, higher stunting rates in these districts undermined progress toward better development outcomes. Households in calamity-hit districts were more impoverished than the national average (31.2 percent compared to 21.9 percent), and poverty rates for many flood-affected districts in Sindh and Balochistan were much higher. For instance, district-level poverty rates for calamity-hit districts in Balochistan ranged from 26.3 percent in Kohlu to 75.8 percent in Khuzdar; and in Sindh, from 15 percent in Hyderabad to 53.4 percent in Badin.

Reversing these negative shocks to household welfare will take considerable time, and losses to human capital and land productivity can set in motion more durable declines in welfare. The impact of the floods is likely to exacerbate already existing inequalities, revealing serious differences in safety, education, decision-making, and employment. Vulnerable groups, such as women, children, people with disabilities, and refugees, are likely to be disproportionally affected by the floods due to their limited access and availability to social protection and coping mechanisms.

Building Back Better for a Resilient Pakistan

Introduction

The floods of 2022 have devastated people’s lives, assets, and livelihoods on an unprecedented scale. The disaster was triggered by the heaviest and most concentrated monsoon rains ever recorded in the country. Around 33 million people—one in seven—have been affected, including nearly 8 million displaced. An estimated 15 million people remain directly exposed or close to flood areas. The floods have taken the lives of more than 1,700 people, one-third of which were children. As of October 11, 94 districts were declared as “calamity hit” by government authorities, which amounts to more than half of all districts in the country. The majority are in the provinces of Balochistan, Sindh, and KP.

An Unprecedented Climate-induced Disaster

Pakistan’s high vulnerability to climate change is a risk multiplier, compounding its human and economic development challenges. Pakistan ranks among the top 10 countries worldwide most affected by climate change. Extreme weather events have been increasing in frequency and intensity, impacting ecosystems, people, settlements, and infrastructure. The country is increasingly exposed and vulnerable to various natural hazards, particularly floods, tropical cyclones, droughts, landslides, and earthquakes. The ND-Gain Index has ranked Pakistan as the 39th most vulnerable country and the 27th least ready country in the world to address the impacts of climate change. The poor are the most vulnerable as they are the most reliant on agriculture, livestock, fisheries, forests, and groundwater, which are now heavily degraded. They are further most directly impacted by natural hazards and the slow onset of climate change.

Compounding Crisis

The catastrophic flooding has triggered a cascade of crises and consequences are still unfolding. Crop and livestock loss, as well as displacement, have led to loss of livelihoods. Lost

food stocks, poor harvests, and rising food prices will exacerbate food insecurity and nutrition outcomes. The prevalence of standing water, lack of safe drinking water, and limited access to sanitation and hygiene services are contributing to a rise in waterborne illnesses and further loss of lives. Prolonged school closures and lack of education access will have long- lasting impacts on learning outcomes. The extensive loss of livelihoods, assets, and human capital builds on existing disparities and will affect the most vulnerable and marginalized households, with disproportionate impacts on women and girls. The floods have also exacerbated long-standing structural weaknesses, posing risks to a sustained recovery. Ensuring macroeconomic stabilization while supporting relief and recovery is a complex challenge with worsening external conditions, including the rise of global commodity prices and interest rates. Political stability is critical for a coherent and timely response. As climate change accelerates the severity and frequency of disasters, institutional reforms and investments must go beyond business as usual and build systemic resilience. If transformational measures are not taken for a resilient recovery, the disaster will have multi- generational impacts through the reduction of developmental gains.

Government and International Response

The humanitarian response has been led by the Government of Pakistan, which established the NFRCC to oversee the national response to the monsoon rains and floods. The NFRCC comprises representatives of federal stakeholders, provincial governments, and the Pakistan Armed Forces. National-level government assistance is organized through the NFRCC. The Armed Forces and civil administration have been providing search and rescue and logistics and engineering support, while the National Disaster Management Agency is procuring relief supplies and coordinating bilateral in-kind donations for distribution through the Army, which has been mobilized under constitutional provisions.

The humanitarian situation continued to deteriorate in August as heavy rains continued to cause flooding and landslides. On August 5, the Ministry of Foreign Affairs officially requested humanitarian assistance from the UN and international community. On August 19, the government launched a PKR 37.2 billion flood relief cash program for 1.5 million affected families. On August 30, the Government of Pakistan and the UN jointly launched the 2022 Pakistan FRP, which highlighted the main humanitarian needs and outlined an action plan to respond to the immediate needs of the people. On October 4, a Revised Pakistan FRP was released, appealing for US$816 million to cover the most urgent needs of 9.5 million people. However, as of October 21, only 13.7 percent of the requested amount has been funded.

Relief efforts have largely focused on the provision of shelter, safe drinking water, food items, and health interventions amidst supply chain disruptions. The international community, as well as over 100 local and international organizations, have provided aid, but accessibility due to standing flood waters, flood effects, and complex topographies remain a major challenge. Although some areas have proceeded to an early recovery phase, the scale and prolonged period of the ongoing disaster requires strategic coordination to effectively link and transition from humanitarian response to recovery.

Pakistan’s Vision for a Resilient Recovery

The catastrophic floods are a wake-up call for systemic changes to address the underlying vulnerabilities to natural hazards and their intersection with other shocks. At this critical point, swift action is necessary for a paradigm shift to mainstream resilience to natural hazards in development planning and asset management. This requires a participatory and inclusive approach, bringing together civil society, government, private sector, academia, think tanks, and the international community around a common vision. The diaspora will also be critical considering their role in remittances and long-term foreign direct investments. Stakeholder engagement will therefore be necessary to inform the scope, design, institutional arrangements, and a monitoring and accountability framework for a comprehensive resilient recovery program. Such a program should prioritize the urgent needs of the affected population while ensuring that results are delivered in an efficient, equitable, and transparent manner. Building on global good practices of recovery and integrating the specific socioeconomic, cultural, and institutional context of Pakistan through a people-centric approach will be crucial.

Disaster Recovery Framework

The vision rests on three key pillars and an underlying foundation. The strategic recovery objectives of the framework and guiding principles of the vision, articulated below, will be critical.

Recovery and Reconstruction Objectives

The strategic recovery pillars will be supported by five strategic recovery objectives:

• Enhancing governance and capacities of the state to restore lives and livelihoods of the affected people, especially the most vulnerable.
• Restoring livelihoods and economic opportunities.
• Ensuring social inclusion and participation in all aspects of recovery and related development.
• Restoring and improving basic services and physical infrastructure in a resilient and sustainable manner.
• Developing an enabling environment and facilitating private sector participation and financing. Guiding Principles to Support the Vision The following guiding principles will be critical to ensure recovery and reconstruction efforts take a consistent approach:

• Participatory, inclusive, and green recovery for long-term resilience.
• Pro-poor, pro-vulnerable, and gender sensitive, targeting the most affected.
• Coordination of government tiers through centralized policy, planning, and coordination; and decentralized implementation.
• Invest in nature-based solutions and ecosystem-based adaptation measures.
• Conflict-sensitive implementation.
• Prioritize institutional and regulatory reforms to ensure sustainability.

• Use of local materials, knowledge, skills, and labor.
• Avoid relocation as much as possible.
• Balance between public and private sector recovery.
• Emphasis of synergies between humanitarian effort and recovery. Next Steps Enabling Policies and Institutional Arrangements: Two key steps are necessary in order to achieve the vision and objectives:

1. the notification of enabling recovery policies; and
2. the finalization of appropriate institutional and implementation arrangements.

Sector-specific policies related to housing, agriculture, and livelihoods are urgently needed as recovery is already fragmented. The appropriate institutional and implementation arrangements should be based in good governance. The arrangements will need to include special provisions for strategic oversight and decision-making; coordination, management, and monitoring of operations; and transparency, accountability, and equity in resource allocation, especially for priority recovery interventions. Institutional arrangements will also need to include citizen engagement and ensure participation by civil society stakeholders.

The institutional and implementation arrangements are key to creating an enabling environment early in the recovery process. Coordination of the different tiers of government, including between federal and provincial governments, will be key. The institutional arrangement setup, financing, and implementation arrangements will be undertaken through a combination of centralized coordination and planning, and decentralized implementation. Central coordination is critical for setting standards, policies, and principles to guide the recovery and ensure inclusiveness, transparency, and good governance. The institutional and implementation arrangements are key to creating an enabling environment early in the recovery process. Special arrangements to balance effective, consistent, and efficient processes in the recovery will be important. This includes fiduciary requirements, such as fast- tracked time-based recovery plans and corresponding investment approvals, and procurement processes.

Recovery Planning: The recovery framework should provide guidance on how the PDNA recommendations will be operationalized by prioritizing the most affected sectors and interventions in the immediate and short term (up to 12 months) and linking them with the medium to longer-term recovery and reconstruction needs. Strategic prioritization of interventions across all sectors, along with stakeholder mapping and resource mobilization

planning, should be initiated. Prioritizing needs based on criteria, such as urgency, institutional capacity, and financing feasibility, and developing financing plans and detailed recovery action plans will also be necessary. The plan should prioritize the urgent needs of the affected population and take an inclusive, participatory, and conflict-sensitive approach, ensuring an efficient, equitable, coordinated, and transparent delivery that is led by the government and supported by the international community. A coordinated transition from humanitarian response to recovery will be a complex yet critical challenge. The recovery and reconstruction plan should be rooted in detailed analysis, including multi-hazard risk assessments, which will be essential to understanding the underlying drivers of the flooding and its long-term impacts. Embedding systemic resilience beyond reconstruction through investments in physical, social, financial, and human capital will provide an opportunity for Pakistan to transform its development trajectory.

Macroeconomic Impact Assessment

The devastating floods of 2022 are expected to have a substantial negative impact on Pakistan’s economy. Economic activity has been severely disrupted, and livelihoods have been impacted; poverty is expected to increase significantly. The government will need to provide immediate relief to impacted communities and support recovery, while simultaneously ensuring macroeconomic stability and fiscal sustainability. This will present difficult policy tradeoffs in the context of challenging global economic conditions, high government debt and debt service payments, and already-large domestic and external financing needs. Evidence from previous natural disasters in Pakistan suggests that economic impacts may persist for an extended period, with damages to the productive capacity of the economy reducing growth prospects over the medium term.

Pre-floods Economic Scenario

Prior to the floods, Pakistan’s economy was facing difficult economic conditions and undergoing adjustment measures to regain macroeconomic stability. Supported by accommodative macroeconomic policies, the economy expanded by 6.0 percent in FY22. Strong domestic demand, coupled with low productivity growth, high world commodity prices, and the global economic slowdown, contributed to severe external imbalances. The current account deficit consequently reached 4.6 percent of GDP in FY22—the largest in four years. The fiscal deficit (excluding grants) was also large at 7.9 percent of GDP in FY22. The large current account and fiscal deficits, together with political and policy uncertainty, contributed to a loss of investor confidence, leading to pressures on the exchange rate, foreign reserves, and domestic prices over late FY22. To stabilize the economy and complement the ongoing monetary tightening, the government began implementing a range

of policies to constrain aggregate demand, including a contractionary budget and increases in domestically administered energy prices. The federal government had targeted a fiscal deficit of 4.9 percent of GDP and a primary surplus of 0.2 percent of GDP for FY23, down from the 7.9 percent fiscal deficit and 3.1 percent primary deficit in FY22. Real GDP growth was therefore expected to slow significantly in FY23 prior to the floods, to around 3.5 percent.28 As a result of stabilization measures, total public debt was expected to decline gradually from current high levels, while foreign exchange reserves were expected to slowly accumulate.

TABLE 3. KEY MACROECONOMIC INDICATORS FY18–22 (YEAR-ON-YEAR, %)

Economic Impact of the Floods

The floods are expected to have a substantial adverse impact on output, which will vary substantially by region and sector. The aggregate economic impact of the floods will, however, depend on the policy response. Substantial expenditures on relief, recovery, and rehabilitation could mitigate the loss in output at the potential cost of worsening fiscal and external imbalances.

Overall damages are estimated at PKR 3.2 trillion (US$14.9 billion), equivalent to 4.8 percent of FY22 GDP.29 The agriculture sector and industry sector each incurred one-quarter of the total damages, while the services sector accounted for nearly half of the total damages.

Among the major economic sectors, agriculture sector value added is projected to decline the most, at 0.9 percent of FY22 GDP, with floods causing the most losses to cotton, date, sugarcane, and rice crops. Around 1 million livestock are also estimated to have perished.30 Furthermore, damages in the agricultural sector are expected to have spillover effects on the industry and services sectors. Flood-related cotton losses are expected to weigh on the domestic textile industry, as local cotton constitutes about half of the industry’s required cotton input. Textiles account for around one-quarter of total industry output and more than half of goods exports. Similarly, the local food processing and slaughtering industries will be negatively impacted by the expected reduction in food harvests and reduced supply of livestock. As a result, industry sector value added is expected to shrink by 0.7 percent of FY22 GDP. Similarly, lower agricultural and industrial activity is likely to adversely impact wholesale and transportation services activities, which account for around half of service sector output. In addition, transportation challenges arising from the loss of critical infrastructure (e.g., roads and bridges) are expected to disrupt supply and further dampen overall economic activity. Value added in the service sector is consequently projected to decline by 0.6 percent of FY22 GDP. Overall GDP decline as a direct impact of the floods is estimated to be around 2.2 percent of FY22 GDP.

The direct adverse impact of the floods on economic growth is expected to be partially mitigated by fiscal measures undertaken by the government. A flood relief cash transfer scheme is underway, through which 1.1 million targeted households are being provided with PKR 25,000 to meet emergency needs. In addition, a temporary elimination of customs duties on essential items for flood-associated relief work has been introduced. Additional budget allocations are expected to be required to meet relief and recovery needs during FY23. Meanwhile, fiscal revenues are expected to be dampened by contracting tax bases, suspension of some food import duties, and slower activity overall. In light of the greater expenditure needs and lower revenue collections, the floods are expected to have a widening effect on the primary and overall fiscal deficits.

The floods will also exacerbate existing external pressures. Around 50 percent of the required cotton input for the local textile industry is sourced domestically. With reduced supplies of domestic cotton, cotton imports are expected to increase to mitigate the shortage. Imports of food products, wheat, pulses, construction machinery, and medicines are also expected to

increase based on increased needs and domestic shortages. Meanwhile, reduced exports of textiles, rice, fruits and vegetables, leather products, cement, and sugar are expected to further widen the trade deficit. Based on the 2010 floods experience, workers’ remittances are likely to increase and continue to play an essential role in financing household consumption and the trade gap. Recent data on remittances recorded an inflow of US$2.7 billion during August 2022, posting an increase of 1.6 percent year-on-year, up from a contraction of 7.7 percent for July 2022.

Inflationary pressures are expected to continue being elevated on account of rising food prices and the weaker exchange rate. With the hike in government administered energy prices, headline CPI inflation had soared to 27.3 percent and 23.2 percent in August and September 2022, respectively. Inflation could increase further as food prices rise in response to crop damage, loss of livestock, and the disruption of transport infrastructure critical for supplying agriculture output to markets. In the CPI basket of goods, essential food commodities such as wheat, rice, chicken, meat, eggs, milk, and fresh vegetables make up 18.4 percent of the total urban CPI and 26.9 percent of the rural CPI. Increase in the prices of these items due to their direct link to the domestic production of crops, poultry, and other livestock will ultimately increase CPI. Price increases as measured by the Sensitive Price Index (SPI), which measures price changes of selected essential items on a weekly basis, had been consistently rising through August, reaching a peak of 45.5 percent for the week ending September 1. Within the SPI basket of goods, food items that have recorded rapid increases in prices are tomatoes, onions, potatoes, eggs, and chicken.

Risks and Priorities

The floods are expected to have a substantial negative impact on Pakistan’s economy. Prior to the floods, the economy was already facing a difficult adjustment to regain macroeconomic and fiscal stability. Implementation of government plans for the necessary fiscal consolidation is likely to become more challenging given extensive relief and recovery spending needs and slower growth of tax bases due to weaker economic activity. While targeted relief measures are needed to cushion the human and economic impacts of flooding, delays in fiscal consolidation will heighten risks to macroeconomic and fiscal stability in the context of the high inflation and fiscal and current account deficits. Similarly, monetary policy should necessarily be maintained at the current tight stance given the overheating economy, extremely high inflation rates, and exchange rate depreciation pressures.

The full economic impact of the floods remains unknown as the situation is still evolving. Large areas remain inundated, hindering on-the-ground damage assessments. Estimates of flood

impacts could therefore worsen as more information becomes available from previously inaccessible areas, or through further crop and livestock losses due to shortages of animal feed, disease, or impacts on the next planting season. Economic challenges would intensify with worsening flood impacts and with delayed or inadequate response efforts.

Largely due to high persistent fiscal deficits, the financial sector has a large exposure to government securities, intertwining its health with the fiscal resilience of the government. Per regulations, bank holdings of government papers need to be “marked-to-market” or revalued daily in response to changes in interest rates in the secondary markets. As interest rates have been increasing, banks are exposed to interest rate risks on their government securities and have started to incur sizable losses on their government-investment portfolios. Flood-related losses have also exposed the microfinance sector to significant downside risks both in terms of profitability and stability in the immediate to medium term. In addition, unanticipated fiscal financing needs are expected to be largely met from domestic borrowing, possibility contributing to further crowding-out of private sector financing, increasing debt servicing costs, and strengthening the sovereign-financial nexus and associated risks.

To manage short-term risks, the government needs to strike a delicate balance between progressing on the required fiscal consolidation and meeting targeted relief and recovery needs. In the context of high domestic and external financing needs, ongoing political uncertainties, and upcoming elections, maintaining market confidence will be critical. Clearly articulating and effectively implementing an economic recovery could help manage market perceptions. It will be critical to maintain a tight monetary policy stance; pursue fiscal consolidation to the extent possible, including through the tight targeting and prioritization of any new expenditures; and proceed with planned structural reforms, including in the energy sector.

Given Pakistan’s limited fiscal resources, significant international support and private investment will be essential for a comprehensive and resilient recovery. The Pakistani authorities are committed to accelerate reforms to generate additional domestic fiscal resources and improve efficiency and targeting of public spending. Beyond the immediate needs of floods reconstruction, these reforms, while protecting the most vulnerable, will be important to generate fiscal space to invest more broadly into more climate-resilient infrastructure and adaptation to climate change, as well as to build buffers to face future shocks, while addressing macroeconomic imbalances. This commitment of the Government will also be key to mobilize further international support as well as to unlock private sector

sources of financing—both of which will be absolutely critical to face the current climate change-induced shock.

Human Impact Assessment

The size and duration of shocks will vary across locations and households. This is dependent on the intensity of the flooding and the time it takes for the water to recede, the pre-floods socioeconomic status of the household, and the quality of relief and reconstruction efforts. Even in the best-case scenario, reversing these negative shocks to household welfare will take considerable time; and some losses, such as losses to human capital and loss of land productivity, could set in motion more durable declines in welfare and will require specific attention.

Prior to the floods, many of the calamity-hit districts already suffered from higher monetary and non-monetary poverty, especially among households in rural areas. Moreover, higher stunting rates in these districts undermined progress toward better development outcomes. In 2018–19, 21.9 percent of the population (around 50 million people) lived below the national poverty line. Beyond the national average, rural poverty was more than twice as high as urban poverty (28.2 percent compared to 10.9 percent), and four out of five poor households lived in rural areas. Households in calamity-hit districts were more impoverished than the national average (31.4 percent compared to 21.9 percent), and poverty rates for many flood-affected districts in Sindh and Balochistan were much higher. For instance, district-level poverty rates for calamity-hit districts in Balochistan ranged from 26.3 percent in Kohlu to 75.8 percent in Khuzdar; and for Sindh, from 15.0 percent in Hyderabad to 53.4 percent in Badin. Out of the 25 poorest districts in the country, 19 were calamity-affected.

Non-monetary measures of poverty suggest that during the pre-flood period, households in calamity-hit districts also experienced worse living standards and gaps in access to utilities. These households were likelier to live in katcha or katcha/pucca homes (made entirely or partially of mud and unbaked bricks), which heightened their vulnerability to disasters such as flooding. Furthermore, 15.7 percent of people in calamity-hit districts lacked access to electricity, compared to 9.3 percent nationally. Households were also more likely to lack access to basic sanitation facilities and clean water. In calamity-hit districts, 11 percent did not have access to clean water, almost twice the national average of 6.5 percent.

Beyond monetary and non-monetary poverty, areas affected by the floods showed some of the highest stunting rates in the country. Stunting is worse in rural areas and among poor households that lack adequate water and sanitation facilities. Sindh and Balochistan stand out

at the province level. Similarly, vast differences can be seen among districts, where district- level stunting rates of over 50 percent are commonplace. In addition, estimates suggest that on average, 20 percent of the households in flood-affected areas were moderately or severely food insecure, which is above the national average of 16 percent. Among provinces, the highest proportion of people food insecure are in Sindh with 22.3 percent (3.9 million people) and Balochistan with 22.7 percent (1.6 million people).

Higher poverty rates in calamity-hit districts reflect lower productivity and more limited resilience arising from deficits to their human capital endowment, and constraints in access to opportunities in labor markets. Before the 2022 floods, these overlapping deprivations made households and individuals more vulnerable to natural hazards and, ex-post, exposed them to further risks to either fall deeper or remain behind permanently. For instance, the Human Capital Index (HCI) for Pakistan suggests that a child born today will be 41 percent as productive when they grow up as they could be if they enjoyed complete education and full health. This is lower than the average for the South Asia region and lower middle-income countries. Due to lower school attendance rates in Balochistan and KP, Due to lower school attendance rates and worse health outcomes in Balochistan and KP, the HCI is likely to be lower in calamity-hit districts than the rest of the country. In addition, prior to the floods, less than half of the population had adequate health care coverage. At the national level, the percentage of women availing postnatal care was only 33 percent and child mortality was high. Nationwide, close to 22 million children aged five to 16 years were out of school during 2019/20.

Employment in the calamity-hit districts was mainly concentrated in rural areas at 16.3 million people, representing nearly 75 percent of all employment in these districts. The latest figures from the Labour Force Survey 2020–21 suggest that 43 percent of the employed population (around 9.4 million people) worked in the agriculture sector in the affected districts, which is above the national average of 38.5 percent. In terms of employment status, many of the employed population in these districts were in vulnerable forms of employment, including own-account workers in the agriculture and non-agriculture sectors (3.6 million and 2.3 million people, respectively), contributing family workers in agriculture (4.1 million), and casual paid employees (3.5 million people), with only 4.7 million people employed in somewhat secure forms of employment. In addition, in the flood-affected areas, 80 percent of those employed are men, thus revealing significant gender disparities.38

The 2022 floods are expected to have a profound impact on lives and livelihoods. The assessment focuses on the direct impact of the floods and accounts for changes in household

welfare arising from damage and loss, and disruption to basic services, in the aftermath of the floods. The impact on household welfare will come through at least four channels: (i) loss of household income and employment/livelihoods due to destroyed harvest, killed livestock, or inactivity of businesses; (ii) loss of assets, including homes, livestock, productive equipment, and household durables; (iii) rising food prices due to shortages of food arising from lost food stocks and poor harvests; and (iv) loss of human capital, given the significant threat of disease outbreaks and food shortages, and prolonged school closures, with attendant learning losses.

Preliminary estimates suggest that the national poverty rate will increase by 3.7 to 4.0 percentage points, pushing between 8.4 and 9.1 million people into poverty, as a direct consequence of the floods. Similarly, multidimensional poverty will increase by 5.9 percentage points, meaning that an additional 1.9 million households will be pushed into non- monetary poverty. Estimates focus on the short-term impact. Depending on location and design of relief and reconstruction, the impact may vary. Beyond the national average, poverty in Sindh would increase by between 8.9 and 9.7 percentage points, and in Balochistan by between 7.5 and 7.7 percentage points. Moreover, the depth and severity of poverty will increase for households that were already poor prior to the floods. The poverty gap has substantially increased, with the number of extremely poor people living more than 20 percent below the poverty line increasing from 18 to 25–26 million.

Beyond the increase of monetary poverty, estimates indicate an increase in multidimensional poverty from 37.8 percent to 43.7 percent, meaning that an additional 1.9 million households will be pushed into non-monetary poverty. This entails significant increased deprivations around access to adequate health, sanitation, quality maternal health care, electricity, and loss of assets. Multidimensional poverty will increase by 13 percentage points in KP, followed by 10.9 in Balochistan, and 10.2 in Sindh.

Vulnerable groups such as women, children, people with disabilities, and refugees are likely to be disproportionally affected by the floods given their dire circumstances and limited access to social protection and coping mechanisms. The impact of the floods is likely to exacerbate already existing gender inequalities, revealing serious differences in safety, education, decision-making, and employment. More than 800,000 Afghan refugees currently live in calamity-hit districts in Pakistan. These refugees are likely to be poorer than community members, have fewer assets (including land), and live in camps with poor basic services, and depend on humanitarian assistance. Furthermore, 3.8 million people with disabilities live in the calamity-hit districts. People with disabilities are often marginalized, economically

disempowered, and face discrimination in education, employment, housing and transport, and other social services.

Beyond the increase of monetary poverty, the 2022 floods will have a detrimental impact on human development outcomes, potentially deepening existing inequities across households and individuals. The floods will trigger substantial losses to human capital (education and health) with increased incidence of stunting and learning losses, which will have a long-lasting impact on productivity and resilience unless addressed during the rehabilitation phase. An additional 1.2 million households with children between six and 11 years of age will be prevented from attending school, with girls’ education disproportionately deprioritized at the household level. This will significantly disrupt, and in some cases effectively halt, their formal education. In addition to learning loss, school closures have impacted children’s mental health, reduced their access to a regular source of nutrition, and increased their risk of abuse. This situation further increases young girls’ vulnerabilities and chances of unintended pregnancy and early and forced marriages.

In addition, recent gains in infant and maternal health may be reversed, undermining efforts to reduce poverty. There will be an increase in the proportion of households deprived of access to health facilities (such as clinics and basic health units) from 31.4 percent to 34.9 percent, representing an additional 1.2 million households. As a result, an additional 5.5 million households with children under five will not be fully immunized, leaving children at risk of deadly and preventable diseases. An additional 2.8 million households with newborns will be deprived from ante-natal check-ups and post-natal care. Furthermore, 1.5 million households will be deprived of clean water and sanitation, placing more pressure on overstretched healthcare services, thus perpetuating a vicious cycle of disease and poverty. Women will be disproportionately impacted given their role as water and solid waste managers at the household level and as caregivers. The floods will likely aggravate the burden on women’s duties and increase their vulnerability in terms of both health and personal safety.

Preliminary estimates suggest an additional 7.6 million people face food insecurity at the national level, increasing from 7 million to 14.6 million people, as a result of loss of production and price increases. The highest number of food insecure people are in Sindh (8.2 million), followed by Balochistan (2.4 million), KP (2.3 million), and Punjab (1.7 million). Expected delays in the sowing of rabi crops, particularly wheat, are likely to further reduce food availability and drive price increases in the coming months, making access to food more difficult, particularly for low-income groups in hard-hit areas.

Food shortages and widespread disease, associated with increased deprivations of access to safe drinking water and sanitation, will likely have a significant impact on stunting rates in the long term. Regression analysis on stunting suggests that lacking an improved source of drinking water can increase the likelihood of stunting by 9 percent. Lack of adequate sanitation also increases the possibility of stunting by 4 percent. Children from the poorest households (lowest 20 percent wealth status) face the brunt of poor nutritional status, with a 43 percent likelihood of being stunted. A mother’s body mass index (BMI) is crucial to a child’s nutritional status. Children of mothers with a low BMI are 40 percent more likely to be stunted.

Women in particular have suffered notable losses to their livelihoods, particularly associated with agriculture and livestock, with attendant negative impacts on their economic empowerment and well-being. The floods have increased women’s vulnerability to gender-based violence (GBV) due to aggravated household tensions, harassment, and abuse related to displacement and lack of secure infrastructure. Rates of early and forced marriages often increase in the wake of crises and economic security. The United Nations Population Fund estimates that 640,000 adolescent girls during the current crisis are vulnerable and at increased risk of coercions, GBV, and child marriage. Moreover, some other groups of the population might experience disproportional losses, including refugees and displaced persons from Afghanistan, since they are inadequately covered in national household surveys.

In response to the floods, many individuals and households will experience a deterioration of their living standards and circumstances. Interventions should provide immediate relief to those most in need, and the recovery must address the vulnerabilities of those most affected to strengthen the inclusive character of the recovery.

In the immediate aftermath of the floods, social assistance and emergency cash transfers will play an essential role in compensating households for damage and loss of livelihoods, assets, and rising prices, especially for food. Cash transfers can also help prevent households from engaging in negative coping strategies, including child labor.

The provision of emergency health services, with a particular focus on children and women, needs to address a looming health crisis. The increased risks arising from waterborne diseases such as cholera, malaria, and dengue, and the collapse of safe sanitation and limited access to nutrition could have long-lasting implications for inclusive growth (including a rise of stunting rates). Particular attention should be given to pregnant women, lactating mothers, newborns, children under five, immunocompromised persons, and patients with chronic diseases, including people with disabilities and the elderly, whose pre-existing conditions are further aggravated (or

whose drug adherence was compromised) by the lack of access to drugs and health services as a result of the floods.

Finally, programs and policies to support recovery need to reach the worst affected geographic areas and all types of households. Livelihood assistance could support future income generation. Grants, especially to smallholder farmers, could secure their survival, while also contributing to future food supply. International evidence suggests that labor-intensive construction works, such as cash-for-work schemes in infrastructure rehabilitation, will be important to support livelihood restoration and income-generating opportunities. Such schemes should include technical facilitation and skills development on climate adaptation and resilience building.

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