Pakistan has sought adjustments to its fiscal targets under the International Monetary Fund’s (IMF) $7 billion Extended Fund Facility (EFF) after informing the Fund about the Rs744 billion losses the country’s economy suffered due to recent flash floods, The Express Tribune reported.Â
The losses, which are double the previous estimate of Rs370 billion, have led to a reduction in Pakistan’s economic growth projection from 4.2% to 3.5% for the ongoing fiscal year. The IMF is currently reviewing the situation, with further talks scheduled to address these issues.
According to preliminary findings, the damage was widespread, with Punjab bearing the brunt of the losses, accounting for Rs632 billion. The provinces of Khyber Pakhtunkhwa, Sindh, and Balochistan also reported significant damage, contributing to the overall losses.
The main driver of Pakistan’s economy, the agriculture sector, was hit hardest, accounting for Rs439 billion or 60% of the total losses. This has resulted in a revision of growth projections for the sector, now expected to reach 3%, down from the original 4.5%. Major crops were submerged, with a third of the cotton crop destroyed, and significant losses in rice, sugarcane, and maize production.
The services sector faced Rs257 billion in losses, with the transport and storage subsector seeing the highest damage of Rs150 billion. The industrial sector also incurred Rs48 billion in losses, while the real estate and wholesale sectors suffered as well.
The floods also caused widespread destruction to infrastructure, with 229,763 houses damaged, 790 bridges destroyed, and 866 water systems washed away. Nearly 2,811 kilometres of roads were affected, and 1,037 deaths and over 1,000 injuries were reported across the country.
As part of the ongoing IMF review talks, the government is negotiating for flexibility in its budget surplus targets and aims to integrate these flood-related losses into the fiscal framework.Â
The IMF had set a target for the primary budget surplus of Rs3.1 trillion, and Pakistan is seeking to adjust this to reflect the actual damage from the floods.
