By Michael Georgy
ISLAMABAD, Oct 2 (Reuters) - Pakistan should stick to an IMFreform programme in order to secure enough financial support torebuild after devastating summer floods and stabilise itseconomy, the Asian Development Bank (ADB) said.
Pakistan is reeling from floods, which made more than 10million people homeless, ripped apart infrastructure and damagedor destroyed crops over an area of 2.4 million hectares. Morethan 1,750 people were killed.
Heavy financial support was critical for Pakistan longbefore one of the country's worst natural disasters struck. AnInternational Monetary Fund (IMF) reform package agreed in 2008had 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 continuingwith the reform agenda. I am sure actually (this would) underpina lot of donor support for not only the floods but for thestabilisation of the economy," said Juan Miranda, ADB's directorgeneral 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.
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Pakistan turned to the IMF for an emergency package of $7.6billion in November 2008 to avert a balance of payments crisisand shore up reserves. The loan was increased to $11.3 billionin July last year, and the central bank received a fifth trancheof $1.13 billion in May.
The emergency fund is not part of the loan programme. Under the loan programme, the government pledged to implementtax and energy sector reforms and show fiscal discipline.However, the country has been missing the IMF targets regularly.
"We still have a programme with the IMF, and that is notsomething that you stop and then you start again. The economywill benefit by a continuation of the reforms. It's not aquestion 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 adamage assessment for Pakistan, which will give the governmentand donors an estimate of how much rebuilding will cost.
The floods could knock Pakistan's economic growth this yearto as low as 2 percent because of heavy damage to crops, saidMiranda, 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 forfiscal 2010/11 could fall to 2.5 percent.
Agriculture is Pakistan's second-largest sector, accountingfor over 21 percent of gross domestic product. Nearly 62 percentof the population depends on agriculture for their livelihoods.
Reconstruction could cost tens of billions of dollars. TheWorld Bank said on Thursday it had approved over $400 million incredit to help Pakistan rebuild from massive flooding. It saidthe funds were part of the Bank's $1 billion commitment toPakistan in this fiscal year.
The World Bank and the United States have urged Pakistan totake steps to reassure donor countries it is capable of usingaid responsibly and that it can enact reforms.
Miranda agreed, saying periodic audits should be conductedand made available to the public through the media.
"It's not just following the rules but showing people thatyou have followed them. It has to be good, sound, smartoversight," he said. (Editing by Jane Baird) (For more Reuters coverage of Afghanistan and Pakistan, see:http://www.reuters.com/places/pakistan.