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Flood's financial toll a heavy blow to Pakistan's poor

Displaced victims leave the floodlines outside of Sukkar, Pakistan, on Aug. 17.

Kevin Frayer/The Associated Press/Kevin Frayer/The Associated Press

Rehana Younis Bhatti, 18, tried to kill herself by swallowing bathroom cleaner. Her father tried hanging, but she caught him with a noose around his neck and talked him down. Without enough money for food, this family in a poor neighbourhood of Rawalpindi has teetered on the brink for years.

The financial problems that drove the Bhatti family to desperation are becoming more common in Pakistan as floods devastate the country's economy and drive up prices for basic commodities. Like many others, they depend on a government pension that has not increased as market prices more than doubled in the past decade. The prices are climbing even higher as muddy floodwaters swamp more than a million hectares of farmland. The death toll of 1,500 has been small compared with other disasters, but the enormous scale of crop losses is raising new concerns about how the nation will feed itself. Many of the deaths that follow could be hidden from sight, in the slums where people sometimes kill themselves instead of continuing to suffer hunger.

Rehana's mother, Khalida Bibi Bhatti, 33, grabs a crumpled copy of her electricity bill and waves it at her guests. The bill amounts to three-quarters of the family's monthly income, a fact made all the more aggravating by the frequent blackouts that leave their tiny apartment without power for a fan in the sweltering heat.

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"The pension hardly covers the electric bill," she said. "How can we buy enough food?"

How the Bhattis' food costs have changed

Pakistan's federal human-rights office has reported at least 180 suicides in the country as of June, largely attributed to poverty and price hikes. Prices usually climb higher during the holy month of Ramadan, which started last week, as people across the region stock up on supplies for family gatherings.

Wheat prices had already doubled in the past two months, before floods destroyed about 500,000 tonnes of stockpiles. Road closings have also interrupted the regular trucking routes, playing havoc with the supply chain and leaving some stores in the capital struggling to stock their shelves.

Anwar Aziz, 45, one of the owners of Madina Rice Stores in Islamabad, said he usually sells about 300 bags of wheat flour per day, but now has only 25 bags remaining in his storehouse.

"Many factories are closed due to flooding after torrential rains," Mr. Aziz said. "The stocks were caught by muddy water, inundated everywhere. It was so big, quick and powerful that it did not let them shift their stocks onto safer places."

Authorities are still adding up the damage. Initial estimates suggest that 5 per cent of this year's rice crop will be lost. Fruit orchards in northern provinces have disappeared and will take several years to recover. About 50,000 cattle reportedly died in a single district. Prices for some vegetables have tripled or quadrupled.

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"Prices are going up, and even greater hikes are expected," said Arslan Malik, 22, who works at M.S. Shah Traders wholesale market in Islamabad. Some people blame manufacturers for the hikes, he said, but all factories in the country have their own struggles with the rising cost of fuel and electricity.

Even the government cannot pay its bills. Pakistan has promised to stop printing money as a way of avoiding budget shortfalls, but the government still finds itself borrowing from the state bank, taking the equivalent of $490-million (U.S.) in the latest fiscal year. Such borrowing only aggravates the situation, diluting the value of Pakistan's currency and making it more difficult for businesses to get loans, but the government might feel compelled to continue as the flood crisis deepens the deficit.

Even the bailouts provided by foreign donors can have an inflationary effect if not properly administered, says Mosharraf Zaidi, a political economist based in Lahore.

"There is a constant stream of free money into this country, through benefactors such as Canada," Mr. Zaidi said. "Western countries are giving handouts, and it's not for the people. It's for Pakistan's elite, which is spending money like drunken sailors, sustained by their ability to scare the West with the spectre of encroaching Taliban."

The prices of some basic commodities are regulated in Pakistan, but critics say the system often favours wealthy landowners and traders whose support is crucial for any government seeking election. A recent decision to double the minimum price of wheat turned out to be profitable for middlemen, but added inflationary pressures that hurt poor farmers.

Pakistan's former minister of state for finance, Omar Ayub Khan, said the government has tried to curb inflation by raising interest rates, but this is proving ineffective in a country where 60 to 70 per cent of the economy is undocumented.

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"You're stepping on the gas and the brakes at the same time, just spinning your wheels," Mr. Khan said. "This is a huge issue for ordinary people. It's an invisible tax."

Everybody in the country grumbles about higher prices, but they're devastating for families such as the Bhattis. Their situation is unusually bad: Both mother and father have suffered injuries that make it difficult to work, and their youngest son writhes on the floor with what appears to be cerebral palsy.

Their luck changed in recent weeks, however. Friends alerted a local newspaper about their plight, and a politician seized the chance to swoop in for a photo opportunity, presenting them a cheque for the equivalent of $6,000. It could be a life-changing sum, if they can get through the paperwork to cash the government's cheque.

"Now our neighbours are jealous, because they have similar problems," Ms. Bhatti said. "The prices are increasing for everybody."

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