Posted on September 6, 2025
Islamabad:
The simultaneous floods in a western river and two of the East have dragged commercial crops standing in the agricultural heart of Pakistan, in addition to affecting lives and shelters of four million people so far in Punjab alone, numbing the nascent economic stability and prices.
The disaster is developing and the magnitude is still unknown. Pakistan’s food security, which is now treated along with national security, is under a serious threat. Where the floods have submerged vast lands in Punjab and are heading towards Sindh, they have also made the macroeconomic perspective of the country more murky.
Flood comparisons of 2025 are drawn with flood 2022, which had flooded a third of the country, and fears have taken care of what will happen with the nascent economic stability of Pakistan, the relative stability of prices and the external sector that had just published its first current account of account in a couple of decades.
There have always been concerns that the recovery administered on fiscal and external fronts cannot resist any indigenous and exogenous clash or a natural calamity. The nascent economic recovery, which began in June last year and has not yet rooted completely, now faces its first test in the form of the natural disaster that is flooding Punjab and Sindh.
The fiscal numbers agreed with the International Monetary Fund (IMF) in June, particularly the primary balance of Sacrosanct and the provincial cash surpluses, have become irrelevant days before the revision mission of the global lender arrives in Islamabad. The projections of the external sector carried out three months ago, including the current account deficit, imports and exports, have become the history of the distant past.
The provincial and district authorities in Punjab have indicated a significant destruction of houses and farmland. The livelihoods have been seriously affected with rice, sugar cane, corn, cotton and other submerged crops during the maximum harvest. Wheat planting could be delayed and prices have already begun to fly in recent days. Wheat flour is now a more expensive room than a year ago.
The Pakistan Statistics Office launched its first weekly inflation bulletin on September 5. The National Data Collection Agency reported a large increase in tomato prices that increased 46% in a week, followed by wheat flour 25.4% and 9% onion. During the week, 51 articles, the prices of 23 articles increased.
More pricing clashes are also expected in the coming weeks and the Punjab provincial government had already issued instructions to control the fees. This is an important step, but it may not be enough to provide relief to people, given the magnitude of the disaster that still develops.
Livestock losses are increasing, further undermining rural income. Many affected families are small farmers whose houses and fields are now underwater. Floods have seriously affected housing, livelihoods and assets in Punjab, the agricultural heart of Pakistan.
The Pakistan Business Forum (PBF) has requested the immediate statement of an agricultural emergency. In a letter addressed to Prime Minister Shehbaz Sharif, the forum said preliminary evaluations indicated the loss of approximately 60% of rice crop, 35% cotton and 30% of sugarcane in the center and south of Punjab.
These losses will increase even more once the waters of the flood reach Sindh. This would damage the export of rice and require more cotton and sugar imports.
The Pakistan Business Forum has sought immediate aid measures, including the provision of interest -free loans of up to RS2 million for small and medium -sized farmers to support replanting and recovery efforts. He also requested the launch of critical channel infrastructure projects in Punjab and Sindh to improve water management and resilience against future floods.
Punjab, which was the least affected province in the floods of 2022 with only $ 1.1 billion damage to the $ 15.8 billion, this time is the hardest feeding unit.
Khyber Pakhtunkhwa has already witnessed the destruction of the mass scale and Sindh is anxiously observing that the situation develops 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 that flow from India.
What we know so far is that Punjab saw the worst floods of the monsoon after 1988 due to exceptionally high floods in the Sutlej, Chenab and Ravi rivers. It is said that it is for the first time that the three main rivers have reached high flood levels simultaneously.
According to the Provincial Authority for Disaster Management, almost 4,000 villages have been flooded, which affected more than 4 million people throughout the province. Up to 1.8 million people have already been evacuated after their homes were submerged in waters. A million animals have also been evacuated, which is a large number.
The government opted for this year’s economic growth in the rebirth of agricultural and industrial sectors, but the results of recent weeks indicate that there would be at least no growth in the agricultural sector. Floods would also affect the timely planting of wheat cultivation and their implications could be felt in the provinces, since Punjab produces three quarters of total wheat.
One of the obvious results of natural disasters in Pakistan had been foreign loan and AIDS appeals. But past experiences suggest that neither foreign creditors are already generous nor federal and provincial governments had the ability to effectively use these loans. Pakistan’s Minister of Finance, recently admitted frankness that governments could not give invertible projects to lenders for using the $ 11 billion commitments to deal with floods 2022.
The details showed that the World Bank promised $ 2.2 billion and has so far disbursed $ 1.6 billion. The Asian Development Bank committed $ 1.6 billion, but so far it has launched $ 513 million. Similarly, China and the Asian Infrastructure Investment Bank (AIIB) promised $ 1.1 billion, but until now they only gave $ 250 million in the absence of any credible financing project.
The Islamic Development Bank promised to give $ 600 million, but launched $ 231 million. Paris Club countries promised almost $ 800 million, but released $ 139 million. The United States promised to give $ 100 million and gave $ 70 million.
The government should not waste time in making appeals and waiting for loans to materialize. Punjab people desperately need urgent economic assistance, which the provincial government can provide due to their best fiscal position compared to the center.
However, the country has not learned its lessons of the floods of 2022 and there are apprehensions that in the absence of enabling policies and institutional arrangements 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 devise a joint strategy to address the problem, since the amount of damage suggests that recovery would cost many resources.
The IMF team arrives in Islamabad in the third week of September to evaluate the progress of the nation in the implementation of 50 loan conditions and the future economic route before releasing the next section of loan of $ 1 billion.
The Government may have to reopen the macroeconomic objectives of the surplus of the primary budget, provincial cash surpluses and net international reserves. Pakistan had reserved around RS400 billion for contingency expenses in the budget, but the money had begun to run out even before the floods had reached. The emergency group has been exhausted in recent weeks to meet other expenses where there were no assignments, even to pay subsidies to banks and remittance schemes.
People seek immediate relief 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.
Pakistan’s prime minister should soon attribute a strategy to rehabilitate millions of peoples whose lives and livelihoods are being dragged. However, floods should not be used as an excuse to delay some of the structural reforms, which have been pending for a long time and are often ignored under several pretexts.
The agricultural community immediately needs an exemption in the payment of electricity bills and subsidies to rehabilitate lost agricultural infrastructure. The government can declare an agricultural emergency and should also address the issue of deferring the imposition of agricultural income tax for a couple of years during the next review conversations with the IMF.
