By Staff reporter
LAHORE: Finance Minister Muhammad Aurangzeb said the government is in close contact with the International Monetary Fund, which has shown understanding of the economic strain from devastating floods, as the lender prepares to review a $1.4 billion loan program.
Speaking on Sunday in the flood-stricken Kamalia tehsil of Punjab’s Toba Tek Singh district, Aurangzeb emphasized prioritizing domestic resources before seeking additional external funds. “The whole world is watching the difficulties being faced by the Pakistani people,” he said.
The floods, which have killed 972 people nationwide since late August, according to Pakistan’s National Disaster Management Authority, have ravaged Punjab’s agricultural heartland, claiming over 104 lives and affecting 4.5 million people. Fields of rice, sugarcane, and vegetables have been submerged, with the crisis now spreading to Sindh, threatening food supply chains and inflation in the debt-laden nation.
Aurangzeb, inspecting relief efforts at the Mill Fatyana Bridge and a flood camp in Toba Tek Singh, was briefed on the inundation of nearly 80 villages and the relocation of residents. He urged swifter rescue operations, calling the response “unprecedented in the country’s history” and thanking the Pakistan Army for its role. Noting minimal loss of life in the district, he expressed hope that receding waters would allow farmers to replant soon.
The deluges have wrecked roads, bridges, and homes, prompting Aurangzeb to deem electricity bills for affected residents “inappropriate.” He confirmed billing adjustments and outlined support for traders and investors to stabilize the economy, stressing that major decisions would involve provincial governments.
The IMF, offering condolences Saturday for the loss of life, said its upcoming Extended Fund Facility (EFF) review will assess the fiscal year 2026 budget’s capacity to address flood-related needs. “The mission will assess whether the FY26 budget, its spending allocations, and emergency provisions remain sufficiently agile to address the spending needs necessitated by the floods,” said Mahir Binici, the IMF’s resident representative in Pakistan.
The review is pivotal for disbursing a $1.4 billion loan tranche approved in May to enhance Pakistan’s climate resilience. Pakistan, ranked among the most climate-vulnerable nations by the Global Climate Risk Index, faces tight conditions to unlock the funds.
Analysts estimate agricultural losses could cut economic growth by up to 0.2 percentage point this year, with reconstruction demand offering limited offset. The central bank is expected to hold its key rate at 11% on Monday, per a Reuters poll, balancing inflation risks from crop losses against a slowing economy.
Aurangzeb vowed to curb profiteering, targeting hoarders and arbitrageurs to prevent artificial price hikes. “We will not allow arbitrage to take place, hoarding to take place,” he told reporters. “There should not be artificial inflation. We are looking at both the structural and administrative levels, and God willing, will continue to take administrative measures against hoarders.”
With supply chain disruptions looming, economists warn of rising food and overall inflation. Aurangzeb announced a forthcoming farmer relief package and said a full damage assessment would be completed within 10 to 15 days as waters recede. “On that basis, we will proceed together with everyone on a comprehensive basis.”
The minister reaffirmed the government’s commitment to rehabilitating affected families and praised the emergency response. He also highlighted “self-inflicted” factors worsening the crisis, calling for reforms to zoning and land-use policies. “We have to see where we keep the population, where we do farming, where we build our [housing] societies, and what their zoning laws should be,” he said. “It’s about time we also think about the self-inflicted pain.”
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