KARACHI: Pakistan’s catastrophic floods mean it will miss this year’s 4.5 per cent gross domestic product (GDP) growth target, though it is not yet clear by how much, a finance ministry official said on Tuesday.
The International Monetary Fund (IMF) said the floods, the worst in 80 years, will cause major economic harm as donor and investor concerns grow over the disaster’s impact on an already fragile economy.
“It is too early to say the extent of damage and loss of crops. But yes, it is a major catastrophe and it will have a negative impact on economic growth,” said finance ministry spokesman, Asif Bajwa.
The government said it was assessing the damage but it would be substantial, especially in the agriculture sector which accounts for more than 21 per cent of GDP and employs 45 per cent of the labour force.
An economic growth target of 4.5 per cent in the 2010-11 (July-June) fiscal year would have to be revised downwards once the extent of the damage was known, he said. Growth was 4.1 per cent last year.
Pakistan and IMF officials are due to meet on August 23 to discuss a sixth tranche of the loan and Bajwa said the IMF could provide more fiscal space in light of the floods.
The government had to turn to the IMF in November 2008 for emergency financing of $11.3 billion. It has since struggled to meet the Fund guidelines and is expected to have missed a target for the fiscal deficit for the quarter ended on June 30.
The floods, triggered by unusually heavy monsoon rains over the upper Indus river basin over the past 10 days, have ploughed a swathe of destruction more than 1,000 km (600 miles) long from northern parts to the south, killing more than 1,600 people and making two million people homeless.
Published in The Express Tribune, August 11th, 2010.
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