Posted on September 06, 2025
Islamabad:
The simultaneous floods in a Westerner and two oriental rivers have won the cash crops standing in the agricultural heart of Pakistan in addition to having an impact on the lives and shelters of four million people so far in Punjab alone, blurring economic stability and emerging prices.
The disaster takes place and the magnitude is still unknown. Pakistan food security, which is now treated up to national security, is threatened serious. When the current floods overwhelmed vast land in Punjab and head for the Sindh, they also made the country’s macroeconomic perspectives.
The comparisons of the 2025 floods are established with the floods of 2022, which had flooded a third of the country, and the fears took over what will happen to the emerging economic stability of Pakistan, the stability of the relative price and to the external sector which had just published its first surplus of current accounts in a few decades.
It was always feared that the recovery managed on tax and external fronts will not resist any indigenous and exogenous shock or natural calamity. The emerging economic recovery, which started in June from last year and has not yet completely rooted, is now faced with its first test in the form of the natural disaster that flooded Punjab and Sindh.
Budget figures agreed with the International Monetary Fund (IMF) in June, in particular the sacrosanct primary balance and the surpluses of provincial cash, have become unrelevant days before the arrival of the global lender’s examination in Islamabad. The projections of the external sector carried out three months ago, including the deficit in the current account, imports and exports, have become the history of the distant past.
Provincial and district authorities of Punjab have indicated a significant destruction of cultivated houses and land. The means of subsistence were seriously affected with rice, sugar cane, corn, cotton and other crops overwhelmed during the peak harvest. The wheat sowing could be delayed and the prices have already started to skyrocket in recent days. Wheat flour is now a quarter more than a year ago.
Pakistan Bureau of Statistics published its first weekly inflation bulletin on September 5. The national data collection agency reported a major increase in tomato prices that jumped 46% in a week, followed by 25.4% wheat flour and 9% onions. During the week, out of 51 items, prices of 23 items increased.
More price shocks are also expected in the coming weeks and the provincial government of Punjab had already issued instructions to control the rates. This is an important step, but may not be sufficient to relieve the people, given the extent of the disaster still in progress.
Loss of livestock rises, more about rural income. Many affected families are small farmers whose houses and fields are now underwater. The floods seriously affected housing, livelihoods and assets of Punjab, the agricultural heart of Pakistan.
Pakistan Business Forum (PBF) called for the immediate declaration of an agricultural emergency. In a letter addressed to Prime Minister Shehbaz Sharif, the forum said that preliminary assessments have indicated the loss of around 60% of rice harvest, 35% cotton and 30% of sugar cane in the center and southern Punjab.
These losses will once again increase that flood waters will reach the Sindh. This would harm rice export and require other imports of cotton and sugar.
Pakistan Business Forum has requested immediate rescue measures, including the provision of uninteresting loans that can reach 2 million rupees for small and medium farmers to support replanting and recovery efforts. He also called for the launch of critical Canal infrastructure projects in Punjab and Sindh to improve water management and resilience against future floods.
Punjab, which was the least affected in the floods of 2022 with only $ 1.1 billion in damages out of $ 15.8 billion, is this time the most difficult unit unit.
Khyber Pakhtunkhwa has already witnessed the destruction of the mass scale and the Sindh looks at impatiently the situation developing in Punjab and will soon be at its doors with a constant increase in the flow of water due to the rains and the waters flowing from India.
What we know so far is that Punjab has seen the worst Mousson floods after 1988 due to exceptionally high floods in the Sutlej, Chenab and Ravi rivers. It is said that for the first time that the three main rivers have reached high levels of flooding simultaneously.
According to the province of disaster management, nearly 4,000 villages have been flooded, affecting more than 4 million people throughout the province. Up to 1.8 million people have already been evacuated after the overwhelming of their houses in the waters. A million animals have also been evacuated, which is a large number.
The government is betting this year’s economic growth on the Renaissance of agricultural and industrial sectors, but the results of the past few weeks indicate that at least there would be practically no growth in the agriculture sector. The floods would also have an impact on the timely sowing of wheat cultivation and its implications could be felt in the provinces while Punjab produces three quarters of total wheat.
One of the obvious results of natural disasters in Pakistan was foreign loans and AIDS. But past experiences suggest that neither foreign creditors are no longer generous nor federal and provincial governments had the capacity to effectively use these loans. The Minister of Finance of Pakistan recently admitted that governments could not give projects invested in lenders for having used the commitments of $ 11 billion to deal with the floods of 2022.
Details have shown that the World Bank has promised $ 2.2 billion and has so far paid $ 1.6 billion. The Asian Development Bank has hired $ 1.6 billion, but has so far published $ 513 million. Likewise, China and the Bank of Asia Infrastructure Investment Bank (AIIB) have promised $ 1.1 billion, but so far has only given $ 250 million in the absence of credible financing projects.
The Islamic Development Bank has promised to give $ 600 million but has published $ 231 million. The countries of the Paris club have promised nearly $ 800 million but released $ 139 million. The United States has promised to give $ 100 million and have given $ 70 million.
The government should not waste time to appeal and wait for loans to materialize. Residents of Punjab are desperately needing urgent economic assistance, which the provincial government can provide due to its better budgetary position compared to the center.
However, the country has not learned its lessons from the flood of 2022 and there are apprehensions in the absence of empowering policies and institutional provisions for rehabilitation and reconstruction, the recovery process will be slow and painful. The delay in reconstruction and rehabilitation would also increase the economic cost.
Federal and provincial governments must conceive of a joint strategy to deal with the question, because the quantum of damages suggests that the recovery would cost a lot of resources.
The IMF team arrives in Islamabad in the third week of September to assess the country’s progress on the implementation of 50 loan conditions and the future economic path before publishing the next 1 billion dollars loan tranche.
The government may have to reopen the macroeconomic objectives of the primary budgetary surplus, surpluses of provincial cash and net international reserves. Pakistan had put aside around 400 billion rupees for emergency expenses in the budget, but the money had started to exhaust even before the floods reached. The emergency pool has been exhausted in recent weeks to respond to other expenses where there have been no allowances, including for having paid subsidies to banks and for payment plans.
People are looking for immediate help and rehabilitation. Provincial governments are trying to meet their expectations. But if the past is the guide, the bureaucracy gives preference to the numbers on souls.
The Prime Minister of Pakistan should soon turn off a strategy to rehabilitate millions of peoples whose life and livelihood are carried away. However, floods should not be used as an excuse to delay some of the structural reforms, which have been on hold for a long time and are often ignored under various pretexts.
The agricultural community immediately needed an exemption in payment of electricity bills and subsidies to rehabilitate the lost agricultural infrastructure. The government may want to declare an agricultural emergency and it should also address the question of postponing the taxation tax of agriculture for a few years during the next examination of discussions with the IMF.
