Flood-ravaged Pakistan faces tough decisions on resources allocation

Pakistan will have to make some tough decisions on how to allocate scarce resources for rebuilding, following the floods that have devastated large areas of the country according to a senior International Monetary Fund official.

The observation came yesterday as the IMF engaged with Pakistani officials on the first day of economic talks.

In an interview with Reuters Television, Masood Ahmed, director of the IMF's Middle East and Central Asia Department said that while the catastrophe was still unfolding, what was clear was that the floods would leave a major and lasting impact on the country's economy.

Pakistan's finance minister Abdul Hafeez Shaikh is to join the talks in Washington on Wednesday, but he has said he wanted IMF to ease restrictions on the $11-billion loan programme approved for Pakistan in 2008.

According to Ahmed the options available to Pakistanis are to adjust the current Pakistan IMF programme to factor in fiscal pressures from the floods, or to go in for emergency funding provided by the IMF to countries hit by natural disaster.

Even without the floods, Pakistan's economy had been floundering on a two-year financial crisis and the floods would only compound the country's economic woes with the government forced to deal with a growing humanitarian crisis, widespread damage to food crops and infrastructure and lower tax revenues.