Assistance for Pakistan :
IMF assesses financing 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
The International Monetary Fund is meeting with Pakistani Government
officials in Washington to evaluate the economic impact of devastating
floods that have left millions homeless and to discuss ways in which the
IMF can help in the recovery.
Masood Ahmed |
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.
And we can help them in the first instance by looking at the impact
and then looking at how we can be part of the international solution to
providing some support during this difficult period.
IMF Survey online: What do you think
will be the impact of Pakistan’s current program with the IMF?
Ahmed: We have a program with Pakistan and a team from Pakistan is
coming here this week. And the focus of those discussions is precisely
going to be on how the economy is going to be affected by the floods.
It’s a little bit early, but not too early to begin to make an impact on
that. And then to see how the parameters of the existing program will
need to be changed.
It is clear that the effect of the floods on the fiscal side will
mean that the budget targets that were included in the program, the
growth projections that were included in the program, will all need to
be revisited together. And that’s what we’re going to be doing.
IMF Survey online |