September 24, 2010

Pakistan's agricultural recovery to take two years

The agriculture industry of Pakistan will take up to two years to recover from the recent devastating summer floods, the Asian Development Bank (ADB) said Monday (Sep 20).

The ADB and the World Bank are assessing the damage caused by one of Pakistan's worst natural disasters, which destroyed 1.3 million hectares of crops just before the harvest of key products including corn.

"Once the country gets back on its feet, it will be able to meet part of those agricultural import needs that will happen over the next two years," said Philip Erquiaga, director general of ADB's private sector operations.

"We are thinking within that time horizon we should be able to see the agriculture sector coming back," he said.

The ADB said earlier it could provide Pakistan with around US$1.5-US$2 billion of trade finance to help with recovery and reconstruction after the floods, some US$500 million more than it earmarked originally. The ADB expects half of that increase to be used for basic commodities, including food and medicine, said Erquiaga.

The balance of that we will probably see coming in the form of capital goods imports related to reconstruction, he said. In 2009, ADB's Trade Finance Programme exposure of US$249 million to Pakistan banks supported US$983 million in trade.

Pakistan has received US$451 million from the International Monetary Fund (IMF) to help the country rebuild after the floods, the country's central bank said Monday (Sep 20).

The IMF has said the money will go toward Pakistan's budget and immediate foreign exchange needs.