- Government had set 4.2% GDP growth for Fiscal Year 2025-26.
- Islamabad briefs IMF about external financing needs of $26bn.
- No plan to impose any flood taxation, says finance minister.
Pakistan has apprised the International Monetary Fund (IMF) of economic losses amounting to Rs371 billion in the aftermath of recent floods, which severely damaged infrastructure and agriculture.
The government had set a real GDP growth target of 4.2% for the ongoing fiscal year (FY26), approved by the National Economic Council (NEC) and parliament at the time of the budget, The News reported on Wednesday.
However, in light of the flood-related damages, authorities have projected a downward revision of the target by 0.3 percentage points, bringing it to 3.9%.
Ministry of Finance high-ups briefed the IMF review mission about external financing needs of $26 billion, out of which $12 billion will be rolled over, citing the example China’s ambassador gave commitment before IMF last time that all rollover and refinancing requirements of Pakistan would be fulfilled within the stipulated timeframe.
The IMF has also been apprised that Islamabad will reappear on the radar screen of the international bond market during the current fiscal year. It may prefer to launch Eurobond in the last quarter (April-June) 2026 with two pre-requisite conditions, including a further reduction in policy rate by Fed Reserve in US.
Secondly, Pakistan’s risk premium recedes with the improvement of one more notch from international rating agencies.
On macroeconomic modelling and flood damages, Pakistani high-ups informed the Fund review mission recent floods caused 1,006 deaths, 1,063 injuries and 12,569 house damages. The floods also caused damage to 2,133 kilometres of roads, 248 bridges and water infrastructure of 866 in all over the country.
The floods damaged infrastructure as 1,098 educational institutions, 128 health facilities and 3.26 million acres of crop area were affected. The floods also caused damage to 100 public sector buildings, 8 mines, 1,291 commercial areas/shops and 10,991 livestock across the country. The break-up of losses incurred in provinces shows out of 1,006 deaths, 504 occurred in KPK, 304 in Punjab, 80 in Sindh, 41 in GB, 38 in AJK, 30 in Balochistan and 9 in Islamabad Capital Territory (ICT).
The province-wise household damages showed Balochistan witnessed the worst destruction as 5,086 houses were damaged, followed by KPK with 3,222, AJK 2,017, GB 1260, Punjab 238, Sindh 281 and ICT 65.
For road infrastructure, floods caused damage to 1,216km in Punjab, 437km in KP, 201km in AJK, 99km in Balochistan, 20 km in GB, 7km in Sindh, and 0.03km in ICT.
The floods damaged 94 bridges in AJK, 87 in GB, 52 in KP and 3 in Balochistan and ICT each. There is no data on bridge damage for Punjab and Sindh. For the livestock sector, 5,467 livestock in KP, 380 in Balochistan, 239 in AJK, 235 in Sindh, 121 in Punjab and 67 in GB.
The production losses of important crops show cotton production is estimated to face a loss of 1.5 to 2 million bales. Before the floods, cotton production was estimated at 10.2 million bales, but now production may stand at 8 to 8.7 million bales in FY26.
The production has been estimated at 9.5 million tons. But after the floods, its production is estimated to face losses of 0.7 million to 1.3 million tons and might stand at 8.2 to 8.8 million tons.
The sugarcane production will also be damaged to the tune of 2.3 to 4.3 million tons, as it might reduce from 80 million tons to 76 or 78 million tons. Production of maize will also be damaged by 0.5 to 1.3 million tons.
In totality, the agriculture sector growth, which is envisaged at 4.5% for the current fiscal year, might be slashed down to 4% in the wake of recent floods. The agriculture sector faced losses of Rs155 billion.
For important crops, growth is projected to reduce from 6.7% to 4.5%. The losses of important crops are estimated at Rs 87 billion.
The industrial sector growth has been estimated to face a reduction from 4.3% to 4.2% for the current fiscal year. The electricity, gas and water supply faced losses, so its growth is estimated to reduce from 3.5 to 2.9% for FY26.
The services sector growth, which was envisaged at 4pc, has now been estimated to stand at 3.7pc in the aftermath of floods.
The flood has impacted electricity, gas and water supply by 0.6pc, major crops by 2.2%, housing by 0.4%, infrastructure by 1.74%, agriculture growth by 0.5%, industry by 0.1% and services by 0.3% for FY26.
The total accumulated losses are estimated at Rs371 billion to Pakistan’s economy in the wake of recent floods.
Regarding the issue of launching Eurobonds, the Ministry of Finance informed the IMF that the Panda bond would be launched in November with a target of $250 to $300 million in the Chinese market, followed by a second instalment in April 2026.
The launch of Eurobond will be considered in the last quarter of FY26. It has not yet been decided on the exact size of the upcoming Eurobond. Pakistan had to repay $1.5 billion on account of the maturity of the Eurobond. The first $500 million was repaid on September 30, 2025, and then $1 billion by April 2026.
On the external front, IMF was told that the SBP purchased over $500 million in June 2025 from the interbank market. The total purchases from the market hovered around $7.7 billion in a bid to build up foreign exchange reserves.
