JS Securities Limited - JS Research.

Karachi -- January 10, 2023 (PPI-OT)

Pakistan secures commitments worth over 3% of GDP

As per news reports, Pakistan has secured commitments worth ~US$11bn (~3.3% of GDP) at the International Conference on Climate Resilient Pakistan for rehabilitation of 2022-flood affected areas. This amounts to ~69% of estimated US$16bn recovery needs. In comparison Pakistan received US$4.5bn vs reconstruction cost of US$7bn post 2010 Floods.

While funds would materialize in SBP's foreign exchange reserves gradually, any inflows are a good omen for Pakistan which carries an import cover of ~4 weeks with loans and deposits worth ~1x of SBP reserves maturing in the short term.

The underlying question in the funding comes towards local sources, which would be the remaining 31% of the requirement, estimated broadly to be funded from PSDP reallocations.

Around US$11bn commitments received from the world

Pakistan, along with the United Nations, co-hosted the International Conference on Climate Resilient Pakistan that was held to bring leaders of nations, private sectors and public sectors to support Pakistan post the catastrophic floods that struck in Aug-2022. To recall, the floods were among the worst floods Pakistan has seen in the last 30 years, affecting 33 million citizens of the country. At the conference, the government presented its Resilient Recovery, Rehabilitation and Reconstruction Framework (4RF) and secured multi-billion dollars' worth of support from participants to rebuild the flood affected areas.

As per latest reports, Pakistan has successfully managed to secure funds ~US$11bn (3.3% of GDP), where prominent commitments came from World Bank (US$2bn), Islamic Development Bank (US$4.2bn), Asian Development Bank (US$1.5bn), Asian Infrastructural Investment Bank (US$1bn) and Saudi Arabia (US$1bn). This totals to 69% of the estimated reconstruction costs of US$16bn post floods, vis-AA -vis planned funding of 50% from foreign sources. As per the 4RF report, the remaining will be sourced locally (initially estimated 30% PSDP/Annual Development Programme, 15% PPP and 5% Civil Society Organizations) by conducting a reallocation of existing PSDP and ADP funds and through a multi-year plan.

The...