ISLAMABAD: The International Monetary Fund (IMF) will work with the international community to support Pakistan’s relief and reconstruction efforts, the lender’s resident representative said on Sunday, after the catastrophic floods that have caused widespread death and destruction in the country.
Unusually heavy rains and glacier melt in the north brought massive floods in Pakistan that have killed 1,545 people and affected more than 33 million in the South Asian country since mid-June.
The deluges washed away livestock, swathes of standing crops, bridges and roads, with officials saying the losses could run as high as $40 billion.
“We will work with others in the international community to support, under the current program, the authorities’ relief and reconstruction efforts, and especially their ongoing endeavour to assist those affected by the floods while ensuring sustainable policies and macroeconomic stability,” Esther Perez Ruiz said in a message to Reuters.
The development comes as Pakistan continues to grapple with a widening current account deficit, currency depreciation and inflation that hit a 47-year high at 27.3 percent in August.
Pakistan’s foreign reserves have declined by $176 million to stand at $8.624 billion — barely enough to cover 40 days of imports — due to external debt and other payments during the week that ended on September 09, according to the central bank data.
This has led to added pressure on the rupee. The Pakistani currency lost 0.41 percent of its value on Friday as the US dollar closed at Rs236.84 after recouping from some of its earlier losses.
The Pakistani currency lost its value by 3 percent, or Rs7.02, during the week, according to the State Bank of Pakistan (SBP).
Late last month, the IMF completed seventh and eighth reviews of the extended arrangement under the $6.5 billion program for Pakistan, clearing the way for immediate disbursement of $1.1 billion that brings total disbursements for budget support to the South Asian country to around $3.9 billion.
The IMF program availed in 2019 initially had $6 billion volume, however, the Fund on Monday expanded it on the request of Pakistani authorities to $6.5 billion until June 2023.
Financial analysts say the devastation from floods may cause around $2 billion impact on the country’s balance of payments as Pakistan is expected to opt for the import of food commodities.
