According to initial estimates, Pakistan's GDP growth shrunk by almost 2.5 percent and overall loss to assets is hovering around 6-8 percent of GDP. "The floods which have hit Pakistan in recent weeks and brought suffering to millions of people will also pose a massive economic challenge to the people and government of Pakistan," the statement said. The scale of the tragedy means that the country's budget and macroeconomic prospects, which are being supported by an IMF financed program, will also need to be reviewed.
"We look forward to meeting with Pakistani government officials in Washington next week to evaluate the macroeconomic impact of the floods, assess the measures they are taking to address this impact, and discuss ways in which the IMF can assist Pakistan at this difficult juncture," Masood said.
Pakistan is expected to seek one percentage of GDP as relief in the fiscal deficit during the negotiations with the IMF on August 23. The issue of 'reformed GST' and power sector will also come under discussion. As highlighted by IMF Managing Director Dominique Strauss-Kahn in his letter to President Asif Ali Zardari at the outset of this disaster, the IMF stands with Pakistan at this difficult time and will do its part to help the country.