ISLAMABAD:

Pakistan on Wednesday informed the International Monetary Fund (IMF) that its economy suffered Rs744 billion in losses due to floods, with 60% of the damage occurring in the agriculture sector and again sought adjustment of these losses against the programme targets.

The preliminary damage assessment has been shared with the IMF, as Finance Minister Muhammad Aurangzeb confirmed that the review talks concluded with the global lender on Wednesday. The talks were aimed at securing two loan tranches totalling around $1.2 billion under separate loan programmes.

Aurangzeb said that the IMF had shared the Memorandum for Economic and Financial Policies (MEFP) and that the Staff-Level Agreement for completing the second review would be announced after further discussions. The MEFP is a set of policy documents agreed upon by both sides. “There has been a broader consensus with the IMF,” said the finance minister during an informal discussion outside the Q Block with journalists from two media outlets.

Sources said that towards the conclusion of the talks, discussions focused on adjusting the impact of the floods against the programme’s targets of primary budget surplus and provincial cash surplus. The finance ministry also briefed the prime minister in this regard, they added.

The IMF had set the primary budget surplus target at Rs3.1 trillion and had earlier indicated roughly Rs500 billion adjustments within the budget to offset the flood impact. Sources said that the finance ministry wanted the IMF to allow adjustments against the target to the extent of the actual damages.

According to preliminary findings shared with the IMF, the economy sustained Rs744 billion in losses. After adjusting these losses, the economic growth is now projected to remain at 3.5%, against the annual target of 4.2%. The revised growth projection is still about 1% higher than the World Bank’s recent projection of 2.6%, which also cited flood damage.

Of the Rs744 billion losses, Punjab bore Rs632 billion, according to initial assessments. Khyber-Pakhtunkhwa (K-P) reported Rs51.3 billion in losses, followed by Sindh with Rs32.2 billion, another Rs12.6 billion in K-P, and Rs6.8 billion in Balochistan.

Flooding in three rivers and flash rains in the country’s upper regions inundated large areas, forcing the evacuation of 6.5 million people.

The projected Rs744 billion losses are double the earlier Rs370 billion estimate shared with the IMF.

Details show the agriculture sector sustained Rs439 billion in losses, roughly 60% of the total. Almost all these were crop-related. As a result, agriculture growth is now projected at 3%, compared to the 4.5% target. Growth in the crops sub-sector is expected to fall below 1%, against the target of 5.4%. Crops on 3.3 million acres and 22,841 livestock were affected.

Roughly one-third of the cotton crop was destroyed, with output now projected at 7.2 million bales, a reduction of up to 3.4 million bales, as per preliminary estimates.

Authorities estimated that 12.6% of the rice crop was damaged, with expected production at 8.9 million tonnes, representing a loss of 600,000 to 1.2 million tonnes. Sugarcane production has been revised to 79 million tonnes, reflecting losses between 1.3 million and 3.3 million tonnes, or 4% of budget estimates. Maize production is projected to decline by 13%, with output capped at 9.2 million tonnes.

The industrial sector sustained Rs48 billion in losses, with its annual growth rate revised slightly down to 4.1%, according to the assessment.

The services sector is projected to have suffered the second-highest losses of Rs257 billion, reducing its growth forecast by 0.4% to 3.6%. Within services, the transport and storage subsector incurred the highest loss, Rs150 billion, cutting its growth rate almost by half to 1.9%. Real estate activities recorded Rs55 billion in losses, while wholesale and trade sectors lost Rs40 billion.

Preliminary assessments showed that 229,763 houses were damaged, 790 bridges destroyed, and 866 water infrastructure systems washed away. About 2,811 kilometres of roads were damaged.

In Punjab alone, 213,097 houses were damaged, followed by 6,370 in Balochistan, 3,332 in Sindh, 3,222 in K-P, 2,417 in Azad Kashmir, and 1,260 in Gilgit-Baltistan. In Punjab, 1,216 kilometres of roads and 462 bridges were destroyed, while 5,467 livestock perished.

A total of 1,037 deaths and 1,067 injuries were reported nationwide. The highest number of deaths, 509, occurred in K-P, followed by 322 in Punjab, 90 in Sindh, 38 each in Balochistan and Azad Jammu and Kashmir, 31 in Gilgit-Baltistan, and nine in Islamabad.

Floodwaters also affected eight mines and 1,297 commercial shops. About 2,267 educational institutions, 243 health facilities, and 129 public buildings were damaged. The floods disrupted normal life in 70 districts, affecting 6.5 million people, of whom four million were relocated to safer areas.