Rallying support for those in need amid floods

Poor families displaced by the floods urgently need direct cash transfers to survive and begin rebuilding their lives. Many concerned individuals and organisations, aware of the crisis’s severity, are willing to contribute. However, their support hinges on the presence of a credible system that ensures traceability and accountability of the funds they commit.

A history of leakages in public resources, mismanagement and past instances of donated goods appearing in markets has eroded public and partner trust in government relief efforts. Despite this scepticism, many Pakistani business leaders, cognisant of their own limitations in directly driving large-scale impact, may still be willing to fund credible, well-structured initiatives focused on restoration and rehabilitation, provided transparency and accountability mechanisms are firmly in place.

Finance Minister Aurangzeb Khan likely had this dilemma in mind when he recently told the media that, in the wake of climate-induced natural disasters, Pakistan’s greater challenge has not been mobilising donor support but developing credible, bankable projects. Following the 2022 floods, the country secured substantial international pledges, yet the absence of well-prepared, viable proposals hindered their effective utilisation.

“Let’s admit we failed to present investable projects,” he remarked, reflecting on the aftermath of the 2022 floods, which caused damages and reconstruction needs estimated at $30 billion. According to the Ministry of Finance, of the $6.4bn pledged by donors, only $2.8bn was actually disbursed, highlighting a significant gap between commitments and implementation due to weak project preparedness.

The private sector is not inclined towards the idea of declaring an emergency, fearing it could trigger additional taxation or further hikes in tax rates

In January 2023, Pakistan co-hosted a conference in Geneva with the United Nations to engage international partners in its recovery from the devastating 2022 floods. At the event, the government presented its Resilient Recovery, Rehabilitation and Reconstruction Framework, or 4RF, outlining a roadmap for rebuilding and enhancing resilience against future climate-induced disasters.

PPP leader Bilawal Bhutto has repeatedly called to declare an agriculture and climate emergency and seek global support for the growing humanitarian crisis. Prime Minister Shehbaz Sharif, however, has declared to undertake post-monsoon rebuilding using domestic resources, opting against international appeals. This stance likely reflects lessons from the 2022 floods, when much of the promised global aid was delayed or failed to materialise, leaving Pakistan to shoulder much of the burden alone.

Several private sector leaders supported an international appeal to tap into global climate and humanitarian aid funds earmarked for disaster-affected countries. However, they were less inclined towards the idea of declaring an emergency, fearing it could trigger additional taxation or further hikes in tax rates.

They also expressed concern over deficit financing, warning it could reignite inflation and reverse the hard-won macroeconomic stability achieved at significant cost to both citizens and businesses.

Flash floods in Pakistan continue to claim lives, devastate communities, and destroy livestock, property, infrastructure and vast farmlands. Coordinated efforts of public and private sectors are critical, first to ensure the safety and survival of displaced populations, and then to rebuild, restore, and rehabilitate before the recovery process is derailed entirely.

Musadaq Zulqarnain, a leading exporter, believes the government currently lacks the fiscal space to respond effectively. “Any new initiatives will require diverting allocations from Public Sector Development Programme or increasing the fiscal deficit, subject to the IMF’s [International Monetary Fund] approval. The latter, in particular, risks fuelling further inflation,” he warned.

“Businesses will continue contributing for social needs through philanthropy, but such efforts can only address a fraction of the overall requirement,” he said, stressing that a more sustainable solution lies in mobilising private capital. “Investors are willing to step up if the government presents feasible, transparent, and well-structured public-private partnership projects,” he noted, emphasising the need for credible project design and implementation frameworks.

Ehsan Malik, former CEO of the Pakistan Business Council, noted that while rehabilitation needs are unclear, the required sum is likely substantial and beyond the capacity of federal and provincial governments, even if the IMF eases fiscal targets.

He warned that even diverting the entire provincial surplus and PSDP allocations may not suffice, making multi-year rebuilding inevitable. While the private sector may support housing and school rebuilding, it is unlikely to fund major infrastructure.

Abdul Aleem, Secretary General of the Overseas Investors Chamber of Commerce and Industry, urged a coordinated response to the 2025 floods, stressing the need to avoid destabilising tax hikes amid limited fiscal space. He called on provinces, recipients of the bulk of revenue under the National Finance Commission, to prioritise rehabilitation through development budgets and better tax enforcement.

Some government economic members, when approached, urged the media to avoid speculation and await the formal damage assessment, which they believe may exceed the devastation caused by the 2022 floods. Meanwhile, Dr Khaqan Najeeb, former finance ministry advisor, proposed a three-pronged strategy: restore supply chains and reschedule farm loans; repair infrastructure using domestic resources; and conduct a comprehensive damage assessment to set priorities.

Published in Brackly News, The Business and Finance Weekly, September 15th, 2025