US envoy says Pakistan will need to raise billions of dollars to rebuild after floods

US envoy warns Pakistan of flood funding shortfall

KARACHI, Pakistan — The world will only be able to fund around 25 percent of the tens of billions of dollars needed to rebuild Pakistan after the floods, and its government will have to make up the shortfall, the U.S. envoy to the country warned Thursday.

Richard Holbrooke said America would not condition its assistance to the country, but warned that the U.S. Congress might not be generous if it felt that Pakistan was not taxing its own citizens enough.

Pakistan’s rich have traditionally not paid much tax on their income or their property — either because they evade them or are exempt — and the country’s collection rates are among the lowest in the world. Critics have pointed to this shortage of revenue in recent weeks as Pakistani leaders have sought international aid. The country’s economy is surviving on international assistance, and the floods are expected to badly slow economic growth further.

“I don’t want to withhold money they need, but I think we have to be clear that the Congress is going to be reluctant to give money if the money is filling in a gap because people are not paying taxes,” said Holbrooke during a visit to Karachi.

Monsoon rains triggered massive floods six weeks ago that spread across the country and are still continuing in parts of the south. Some 8 million people have been made homeless in what Pakistani and U.N. officials have said is one of the largest humanitarian disasters in living memory.

The United Nations said last week that it had received $310 million toward its initial emergency appeal, although private and bilateral donations bring the global total committed for Pakistan flood aid to roughly US$1.1 billion. On Sunday, donor nations are meeting in New York to appeal for more.

America has given more than $260 million for flood relief and has provided 30 military helicopters to evacuate people and deliver food and supplies.

“Nobody has an accurate estimate of the reconstruction costs because we still don’t know what the damage has been, but it’s going to be in the tens of billions of dollars,” Holbrooke told business leaders in Karachi.

“The international community will never be able to put together that level of support because of all the other needs of the world in these areas, so your government is going to have do something about revenue because there is a clear shortfall,” he said.

Pakistani Foreign Minister Shah Mahmood Qureshi promised in a joint news conference with Holbrooke that Pakistan would do its best to come up with additional resources, saying “we intend to revisit our budgetary priorities, to cap nondevelopment expenditures, to reprioritize our development allocations and see what we can do to organize national resources in a restructuring of our tax system to generate more funds.”

The scale of the floods has raised fears about Pakistan’s stability, a major concern for Western powers as they seek to stabilize neighboring Afghanistan and neutralize the threat from al-Qaida and other Islamist militants hiding in Pakistan’s northwest.

There has so far been few signs of sustained social unrest or political upheaval as a result of the disaster.

Local volunteers, Islamic groups, the Pakistani army and the U.N. have helped millions of victims, but conditions are grim for most survivors, most of whom were very poor even before the disaster.