IMF Sees No Major Flood Impact on Pakistan’s Economy, Projects 4% Growth

Islamabad – September 30, 2025 – The International Monetary Fund (IMF) has assessed that the recent floods will not cause any major disruption to Pakistan’s economy, tax revenues, or growth outlook. Despite estimated damages of Rs 360 billion, the lender projects GDP growth of around 4% this fiscal year.

Key Points

• IMF delegation shared its initial assessment during meetings with Finance Minister Muhammad Aurangzeb.
• Provinces, except Punjab, reported limited economic losses; Punjab’s damage review is still underway.
• The Planning Commission estimates total flood losses at 0.3% of GDP, with overall growth still expected to be between 3.7% and 4%.
• No additional imports are anticipated, meaning the current account deficit will not widen.
• FBR performance remains under scrutiny, as authorities struggle to meet the Rs3.083 trillion quarterly revenue target.

Agricultural Impact

• Despite crop damage, better-than-expected rice and sugarcane sowing is expected to offset major production losses.
• Sindh estimates economic losses at Rs40–50 billion, while Khyber-Pakhtunkhwa put its losses near Rs30 billion.

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IMF Observations

• No visible impact of floods on tax revenues so far.
• IMF urged the Federal Board of Revenue (FBR) to demonstrate the results of its transformation plan, which had Rs55 billion in funding.
• The lender also raised concerns over delays in publishing the Governance and Corruption Diagnosis Assessment report.

Provincial Position

• Sindh, Balochistan, and K-P indicated they could manage rehabilitation within existing resources.
• Punjab’s stance will be crucial, as it was the worst-hit province and is preparing a rehabilitation package.

Broader Context

• Pakistan-IMF review talks, which began on September 25, will continue until October 8.
• Successful talks could unlock over $1.2 billion in loan tranches under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).

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