This is a presentation made by Jenny Nordgren, country analyst at SEB, in a webinar geld on the Benche. Link to a recording of the webinar:

1. The Benche WEBinar September 7, 2010
Jenny Nordgren
Pakistan –
Adding insult to injury
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2. Human catastrophe
 Worst floods since 1920s
 About a fifth of Pakistan is
under water
 Affected around 17 million
people
 Damaged around 30 % of the
agricultural land and 23 % of
this year’s harvest
 Severe damages to the
infrastructure
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3. Massive Economic Challenge
 Agriculture sector 20 % of GDP
 Spillover impacts on textile and
manufacturing sectors
 Damage to the infrastrucure
 Economic recovery jeopardized
– GDP expected to grow by only 2
% instead of projected of 4-5 %
in 2010/11
 Severe pressure on the budget
– Budget deficit widen to 6-7 % of
GDP, well above its 4 % target
in 2010/11
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4. Banking system under strain
 Moodys’s changed its rating outlook on 5 banks to
negative on August 30
 Negative macroeconomic effects from the floods
– Impede corporate sector’s recovery
– Challenge borrower’s repayment capacity
– Textile sector accounts for 14 % the rated banks
loan book
 Deterioating asset quality
 Declined profitability
 Liquidity constraints
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5. External position better than expected
 FX reserves of USD 12.5bn
 External financing need of around
USD 8bn in 2010/11
– Debt repayments of around USD
2bn
– Current account deficit projected
at USD 5-6bn
 Strong inflow of remittances
 IMF loan worth of USD 11.3bn of
which USD 7.3bn has been
disbursed since 2008
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6. IMF vital role to play
 IMF to provide emergency assistance USD 450mn
 Additional USD 1.7bn to be disbursed under the
IMF-program end-2010
 UN appeal of USD 460mn
 World Bank and Asian Development Bank jointly
committed USD 3bn
 Varying amounts from bilateral donors
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7. Fragile security and political situation
 President Zardari unpopular and much-criticised
 Risk of ethnic and social tensions
 Risk of Islamic radicalization
 Cautious Western donor support
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