Washington: The International Monetary Fund (IMF) has approved a disbursement of USD 451 million, under the Emergency Natural Disaster Assistance (ENDA), for Pakistan to help it manage the immediate aftermath of the massive and devastating floods that have hit the country.
The Board`s approval enables the immediate disbursement of the full amount of this emergency assistance; with the hope that it will catalyse and speed an adequate level of disbursements by other members of the international community.
The IMF’s latest instalment of financial aid to Pakistan comes in the wake of the recent devastating flood that has badly hit the country`s economy.
"The agriculture sector, which accounts for 21 percent of Gross Domestic Product (GDP) and 45 percent of employment, has been hit particularly hard. Initial and preliminary assessments suggest that real GDP growth is unlikely to exceed 2.75 percent in 2010-11, mainly because of sharply lower agricultural output," the IMF said.
"Owing to the disruptions in economic activity, pressure on the country`s budget is expected as well as a weakening of the balance of payments position. An updated estimate on the economic impact of the floods should be available after the completion of damage and needs assessment in the fall," the Washington-based organisation said.
IMF said USD 451 million in emergency assistance will be directed to the country`s budget.
It will help finance the additional spending to help the population affected by the floods and the associated immediate foreign exchange needs, thereby mitigating a decline in external reserves and supporting confidence in Pakistan`s external position.
Extending its deep sympathy to the people of Pakistan for the loss of life, human suffering, and extensive damage to property and infrastructure caused by catastrophic floods since late July, Naoyuki Shinohara, the IMF deputy managing director and acting chair said the adverse impact of the
floods has resulted in significant fiscal and balance of payments needs related to relief operations.
"The Fund`s emergency assistance to Pakistan will help finance needed imports and is expected to catalyse additional external support - preferably in the form of grants or highly concessional financing - which is critical to help meet the immediate budgetary and balance of payments needs and avoid excessive recourse to domestic financing," Shinohara said.