By Hamza Ameer Islamabad 1st, September : Following the time that Pakistan has secured the revival of the crucial bailout deal with a staff deal with the International Monetary Fund (IMF), Islamabad is now weighing options to request an urgent loan from the institution to fund assistance and rescue measures in the devastating floods that have caused estimated loss of 2.5 trillion PKR.
Based on the initial estimates of the Ministry of Finance, the average inflation rate could drastically increase to as high as 26 percent because of the disruption in the supply chain.
The figures of 26 percent are more than the IMF and the State Bank of Pakistan’s (SBP) pre-flood forecasts of 18-20 percent.
According to sources the Ministry has made the preliminary estimates of economic losses resulting from flooding and is expected to make the presentation in an upcoming Cabinet meeting with other stakeholders, including the SBP and Planning Ministry.
“Once the amount of losses is determined and the government has reached an agreement, it will take the decision to approach multilateral and bilateral lenders for aid in the form of financial assistance.” explained Aisha Pasha of State for Finance.of State for Finance.
“The news coming out of Pakistan is deeply sad and my thoughts are with the families and those affected by the massive flooding,” Asia Development Bank President Masatsugu Asakawa said.
According to Pasha the initial estimates suggest that the economic losses could be as high as 2 trillion PKR.
The possibility of reaching for the IMF for an emergency flood relief assistance is already being discussed during discussions between Finance Minister Miftah Ismail and the Prime Minister Shehbaz Sharif.
“Miftah Ismail brought up the IMF financing issue at an emergency meeting, which was present was the Chief of Army Staff General Qamar Javed Bajwa.” said an official in the Finance ministry.
According to Ismail the source, there two financial instruments being considered at present.
But, he added that as discussions and deliberations are in the beginning however, no decision has been taken to talk to the IMF.
The IMF had previously approved $1.4 billion in emergency finance for Pakistan under the Rapid Financing Instrument (RFI) to aid the country in dealing with the covid-19 pandemic in April 2020.
Experts believe that, similar to the April 2020’s RFI from the IMF, a condition-free financial assistance is the only option for Pakistan since other instruments of financing of the IMF require pre-conditional action or economic fundamentals that cannot be achieved at present.
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