Pakistan’s Finance Minister Muhammad Aurangzeb has confirmed that the recent deadly floods have caused severe damage to the nation’s agriculture sector, particularly affecting rice and cotton production, leading to a slowdown in the country’s economic growth.

Speaking to Bloomberg News in Washington, Aurangzeb said that initial assessments reveal widespread destruction across farming regions, with detailed evaluations expected in the coming months.

> “The floods will make a dent in our GDP growth,” Aurangzeb stated. “We still expect growth between 3.5% and 4%, but the impact is undeniable.”

Impact of Flooding on the Economy

The monsoon floods, which began in late June, devastated vast farmlands, especially in Punjab’s rice-growing areas. The disaster displaced over 4 million people and claimed nearly 900 lives. Before the floods, Pakistan’s economic growth was forecast at 4.2% for the fiscal year ending in June 2026.

Aurangzeb emphasized that the catastrophe is a stark reminder of climate change’s real-world effects, saying, “Climate change for us is not theoretical — we are living through it.”

Economic Outlook and IMF Support

Despite the challenges, Pakistan’s $407 billion economy has shown signs of stabilization following a near-debt default two years ago. The country is set to receive $1.2 billion in funding from the International Monetary Fund (IMF) after a successful review of its $7 billion loan program.

The IMF projects Pakistan’s GDP growth between 3.25% and 3.5%, while inflation is expected to hover above the government’s 5%–7% target range, easing from the record 38% inflation seen two years earlier.

Strengthening International Ties

In addition to rebuilding domestic stability, Pakistan has been reviving its economic and defense relations with the United States after years of tension. The two countries recently advanced a trade deal that introduced a 19% tariff on Pakistani goods, notably lower than the 50% rate imposed on Indian exports.

Launch of Panda Bonds to Diversify Funding

To expand its financial resources, Pakistan is preparing to issue its first-ever yuan-denominated bonds, known as Panda bonds, by late November or early December.

Aurangzeb said the $250 million bond issue marks an important step in diversifying Pakistan’s funding portfolio, adding:

> “We’ve tapped the dollar, euro, and sukuk markets — now it’s time to access the world’s second-largest capital market.”

The introduction of Panda bonds is expected to attract new investors and strengthen Pakistan’s financial position amid ongoing recovery efforts.