By Staff Reporter
ISLAMABAD: Finance Minister Muhammad Aurangzeb said recent floods that ravaged farmland across the country will likely curb economic growth this fiscal year, as initial assessments point to heavy damage in key agriculture sectors like rice and cotton.
“This will put in a dent to our GDP growth number,” Aurangzeb said in an interview with Bloomberg News in Washington. “My own view is it will still be north of 3.5%, early days, but anywhere between 3.5 to 4%.”
Heavy monsoon rains that began in late June devastated agricultural land, killing hundreds of people and displacing more than 4 million, according to government data. A more detailed damage assessment is expected in the coming months. “Climate change for us is not academic,” Aurangzeb said. “We are living it, and the recent floods actually are a reflection of that.”
The State Bank of Pakistan warned on Thursday that flood-induced losses to agriculture and subsequent infrastructure spending could widen trade and current account deficits, push up inflation, and cap growth at around 3.25% for the fiscal year ending June 2026.
“The flood-induced losses to agriculture and infrastructure [spending] are likely to have upside risks for the projection of twin deficits and inflation outlook, while downside risks for growth,” the SBP said in a brief on the economic outlook in its Annual Report 2024-25 on the State of Pakistan Economy.
The International Monetary Fund estimates Pakistan’s economy will expand between 3.25% and 3.5% in the fiscal year despite the destructive rains.
Minister for Planning, Development and Special Initiatives Ahsan Iqbal said the floods caused estimated losses of Rs822 billion and claimed more than 1,000 lives.
Speaking at an event to launch the Planning Ministry’s monthly development update and the initial damage assessment report, Iqbal said the recent floods caused large-scale devastation, particularly to the agriculture and infrastructure sectors. “Preliminary estimates show that agriculture sustained losses of Rs430 billion, while infrastructure damage is valued at Rs307 billion,” Iqbal said.
Punjab recorded damage to over 213,000 houses, Balochistan over 6,000, Sindh 3,332, and Khyber Pakhtunkhwa more than 3,200 homes. In Azad Jammu and Kashmir and Gilgit-Baltistan, more than 3,600 houses were affected. Over 2,267 educational institutions were also damaged, while 0.6 to 1.2 million tonnes of rice crops are feared to have been affected.
On the economic front, Iqbal said inflation in the first quarter of the ongoing fiscal year declined from 9.2% to 4.2%, while tax collection increased by 12.5%, with the Federal Board of Revenue collecting Rs2.884 trillion compared to Rs2.563 trillion in the same period last year. He said private sector and bank credit grew by 16%, reflecting business expansion, and remittances increased by 8.5%, showing renewed confidence among overseas Pakistanis
Aurangzeb told the US media outlet that Pakistan plans to issue its inaugural tranche of yuan-denominated debt — known as Panda bonds — by late November or early December. “The $250 million issue is key to diversifying the country’s funding channels,” he said. “We have tapped the US dollar market, we have done euros, we have done Islamic sukuk, but we had not accessed the second largest, the second deepest capital market in the world.”
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