IMF Assesses Financing for Pakistan After Devastating Floods

Pakistani team in Washington to discuss country's economic prospects after floods

Pakistan and IMF to look at need for emergency financing

Reconstruction costs expected to run into billions of dollars

Masood Ahmed, Director of the IMF’s Middle East and Central Asia Department, described the flooding as a “human catastrophe that is still evolving.”

He said in an interview with IMF Survey online that the economic costs would be very significant. The IMF is discussing this week the implications for the budget and longer term growth targets and how the IMF can help Pakistan as part of an ongoing $11 billion loan program. The program began in late 2008 and loan installments are subject to a review by the IMF of Pakistan's economic policies and performance, including the government's budget deficit and making public finances more sustainable. The Fund will also discuss with Pakistani officials the need for emergency assistance.

Pakistani Finance Minister Abdul Hafeez Shaikh is due to attend talks with the IMF on August 26.

Following is a transcript of the interview.

IMF Survey online: What’s the economic impact of the floods on Pakistan?

Masood Ahmed: The floods are having a major impact on the economy of Pakistan. They are, of course, a human catastrophe and it’s still evolving, but the economic impact is also going to be very significant. It’s affecting the agricultural sector. Production is going to be down, which will affect the government’s budgets because they will have to spend more and they’ll be able to raise less revenue.

And then Pakistan will have massive reconstruction costs down the road running into the billions of dollars. So the economic effects will be large and they will last a long time.

IMF Survey online: What can the IMF do to help Pakistan?

Ahmed: The IMF has been helping Pakistan over the past two years with the global financial crisis. Now the people of Pakistan, the economy of Pakistan are going to go through a more difficult period and the IMF stands with them to help.

Masood Ahmed: “Pakistan will have massive reconstruction costs down the road running into...