IMF and Pakistan Mull Lower GDP Target Amid Flood Fallout

Amid the devastating impact of recent floods across Pakistan, the government and the International Monetary Fund (IMF) are now reconsidering the country’s official GDP growth target for the current fiscal year. The earlier projection of around 4.2% growth is being reviewed as flood damage continues to weigh heavily on agriculture, infrastructure, and overall economic activity.

The floods have caused extensive destruction to farmlands, roads, and irrigation systems, which play a major role in Pakistan’s economy. This has disrupted trade routes, reduced crop output, and increased inflationary pressures. In this context, both Islamabad and the IMF are working on a more realistic target likely closer to 3.5%  to reflect the challenges facing the economy after the floods.

IMF and Pakistan’s Revised Growth Outlook

During the ongoing review meetings in Islamabad, the IMF and the Pakistani government discussed adjustments to key economic indicators, including growth, inflation, and fiscal balance. Officials acknowledged that the earlier GDP target was set before the true scale of flood losses became clear. The revised figure aims to capture the financial and social impact of reconstruction, food shortages, and loss of productivity in rural areas.

The agriculture and livestock sectors have suffered the most, with estimates suggesting hundreds of billions of rupees in damages. This has created a chain reaction  reduced crop yields, higher food prices, and supply disruptions that also affect manufacturing and exports.

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Government and IMF Negotiations

Both the government and the IMF agree that the focus should now shift toward fiscal realism and recovery planning. Rather than chasing optimistic growth numbers, the priority is to maintain economic stability and ensure adequate funding for flood rehabilitation, food security, and energy imports.

Negotiations are also addressing Pakistan’s external financing needs and debt sustainability. The IMF’s next loan installment is contingent upon progress in these discussions and the adoption of prudent fiscal measures that can support long-term stability.