| Updated at: 1705 PST, Saturday, October 02, 2010|
ISLAMABAD: Pakistan should stick to an IMF reform programme in order to secure enough financial support to rebuild after devastating summer floods and stabilise its economy, the Asian Development Bank (ADB) said.
Pakistan is reeling from floods, which made more than 10 million people homeless, ripped apart infrastructure and damaged or destroyed crops over an area of 2.4 million hectares. More than 1,750 people were killed.
Heavy financial support was critical for Pakistan long before one of the country's worst natural disasters struck. An International Monetary Fund (IMF) reform package agreed in 2008 had helped keep the economy afloat.
Although pressure on Pakistan eased after the IMF approved a $451 million emergency fund to help it rebuild after the floods, the ADB said delaying reforms would only hurt the country.
"What Pakistan should not have a problem with is continuing with the reform agenda. I am sure actually (this would) underpin a lot of donor support for not only the floods but for the stabilisation of the economy," said Juan Miranda, ADB's director general for its Central and West Asia department.
"We must continue with the reforms. This is our position. That's the way in which you can help people in the longer run.”
"We still have a programme with the IMF, and that is not something that you stop and then you start again. The economy will benefit by a continuation of the reforms. It's not a question of just money," Miranda said in a telephone interview.
"My biggest worry is that the reform agenda gets derailed. That we lose momentum."
The World Bank and Asian Development Bank are completing a damage assessment for Pakistan, which will give the government and donors an estimate of how much rebuilding will cost.
The floods could knock Pakistan's economic growth this year to as low as 2 percent because of heavy damage to crops, said Miranda, lowering his forecast from 3 percent in late August.
Pakistan's official target was 4.5 percent.
Pakistan's central bank said this week economic growth for fiscal 2010/11 could fall to 2.5 percent.
Agriculture is Pakistan's second-largest sector, accounting for over 21 percent of gross domestic product. Nearly 62 percent of the population depends on agriculture for their livelihoods.
Reconstruction could cost tens of billions of dollars. The World Bank said on Thursday it had approved over $400 million in credit to help Pakistan rebuild from massive flooding. It said the funds were part of the Bank's $1 billion commitment to Pakistan in this fiscal year.
The World Bank and the United States have urged Pakistan to take steps to reassure donor countries it is capable of using aid responsibly and that it can enact reforms.
Miranda agreed, saying periodic audits should be conducted and made available to the public through the media.
"It's not just following the rules but showing people that you have followed them. It has to be good, sound, smart oversight," he said.