Pakistan Vows Transparency as World Pledges Billions for Flood Recovery

Widespread corruption among Pakistani officials, experts say, has led international donors to be cautious when it comes to disbursement of aid to rebuild the stricken country

[Islamabad] Pakistan promised full transparency of spending as it secured international commitments of $10.57 billion this month for reconstruction in areas of the country devastated by massive floods in the second half of 2022. 

Exceptionally heavy rainfall began in Pakistan in June 2022 and lasted until October. The ensuing floods, exacerbated by climate change, killed more than 1,700 people and affected 33 million others, damaging or destroying 2 million homes and several thousand schools and hospitals. It is seen as the worst disaster in the country’s history, whose recovery is predicted to cost $16 billion.

Speaking to reporters alongside United Nations Secretary-General Antonio Guterres during the International Conference on Climate Resilient Pakistan in Geneva on January 9, Prime Minister Shehbaz Sharif vowed that “every penny will be spent in the most transparent fashion.”

“I have put in place third party validation mechanisms so that every penny is accounted for and is invested in the interest of the needy and helpless people who have been badly affected by these ferocious floods,” Sharif said as he thanked the international community for its donations. 

The floods are estimated to have increased the national poverty rate, pushing an additional 9.1 million people below the poverty line. Existing health and food insecurity were also exacerbated by the disaster, again disproportionately affecting the most vulnerable.

The government of Pakistan declared a national emergency on August 26 and appealed for worldwide aid. Guterres visited Pakistan on September 9 and called for “massive and urgent financial support” for the stricken nation.

The high-level January 9 conference was organized by the UN and Pakistan to discuss the country’s financial needs and a strategy for a resilient recovery. Officials from 40 nations gathered in Geneva, alongside private donors and international financial organizations, in response to Pakistan’s urgent quest for assistance.

“The conference brought together the international community to reaffirm solidarity with Pakistan, to review the recovery needs of the affected population, and to identify the support required to reconstruct and rehabilitate the damaged infrastructure in a resilient manner,” Pakistan’s Ministry of Foreign Affairs said in a statement to the media.

“The conference focused on discussing and endorsing a comprehensive recovery strategy named 4-RF: Resilient Recovery, Rehabilitation, and Reconstruction Framework, building on the Post-Disaster Needs Assessment undertaken,” the ministry said.

According to the European Union delegation in Geneva, the 4-RF “defines timeframe, priorities, institutional arrangements, policy articulation, financial management, and implementation modalities for recovery and reconstruction through a consultative process with federal and provincial governments.”

Pledges at the conference included $4.2 billion over the next three years from the Islamic Development Bank and a further $2 billion from the World Bank. The Asian Infrastructure Investment Bank, European Union, Saudi Arabia, China, the United States, France, Germany, Japan, and other nations also announced financial support.

Sharif’s pledges for full transparency stem from the large-scale corruption and bribery among officials across the country. Pakistan was ranked 140 out of 180 countries on Transparency International’s 2021 Corruption Perceptions Index.

“We have one of the worst governances; here the elite rules,” political economist and former federal finance minister Miftah Ismail told The Media Line. “We should worry about the future of Pakistan.” 

The former finance minister claimed that he “averted default and left the economy in a better condition, but now again the economy is in trouble.” 

Ismail said that the country had to show that it was capable of handling its own affairs in order to attract support. 

“When Pakistan does not help itself, why will others help us?” he said. “If Pakistan is not doing well, it is not the fault of the IMF, China or Saudi Arabia.” 

Irina Tsukerman, a New York-based South Asian expert, told The Media Line that the sums pledged in Geneva “will not be sufficient.” 

“Pakistan still needs to cover the remainder or engage in other fundraising efforts or borrow money to address the full extent of the urgent needs arising from the crisis,” she said.

Tsukerman also raised the issue of “institutional corruption,” arguing that it is “one of the main reasons why Pakistan has not received more funding commitments from the international community quickly.” Furthermore, she said, “there is a global concern that Pakistan is not pulling its weight.” 

She warned that, “political instability, corruption, and common reports of funds not reaching genuine victims undermine donors‘ confidence, ultimately leading to more dire situations.”

In order to avoid “tough conditions” imposed by the global community and to attract more assistance, “Pakistan must institute a mechanism for transparency,” she said.

Adeeb Ul Zaman Safvi, a Karachi-based senior defense and political analyst, told The Media Line that the pledged funds will not be delivered to Pakistani officials as a lump sum. 

“The promised aid will be disbursed in phases over the next three years,” he said. “It will not be hard cash being deposited in the State Bank of Pakistan.”  

This staggered disbursement, he said, means that the “relief work will require consistency, transparency and commitment of government to ensure that affected [areas] are provided with the required assistance.” 

Javed Qaiser, an Islamabad-based economist and chartered accountant, told The Media Line that the IMF will be monitoring the foreign aid pledged in Geneva “to ensure that it is not used for purposes other than those for which it is being donated.” 

“As the major donors are the World Bank, Asian Development Bank and Islamic Infrastructure Development Bank, the IMF will act as a monitoring body on their behalf and also for the rest of the donors,” he said. 

Qaiser also warned that while “international donors have pledged generously, it does not match the volume of catastrophe.”

However, he added, “people’s efforts, coupled with private local and foreign donations will help restore a lot of losses.”