Karachi – September 16, 2025: The Institute of Cost and Management Accountants of Pakistan (ICMA) observes that the recent floods have caused unavoidable supply shocks, driving short-term inflation. While the State Bank of Pakistan has kept the policy rate at 11 percent to maintain stability, ICMA believes that a modest rate cut could have eased financing pressures, supported farmers and businesses, and helped the economy recover more quickly.
ICMA notes that floods have severely disrupted agriculture and food supply chains, creating supply shocks that could push prices higher in the near future. High borrowing costs at this time risk slowing investment and delaying recovery. This could reduce employment opportunities, particularly in agriculture, SMEs, and food production.
ICMA’s analysis shows that a modest reduction in the policy rate could have lowered borrowing costs, encouraged investment, and helped restore supply chains. A clear roadmap for gradual rate adjustments, aligned with inflation of three to four percent and regional benchmarks, would boost investor confidence, help businesses plan ahead, and support long-term economic growth.
ICMA also recommends targeted concessional credit and refinance schemes for agriculture, SMEs, and flood-affected areas to ease cost pressures and support vulnerable communities. Monetary policy should remain transparent and predictable, while fiscal authorities focus on emergency relief, subsidized farm inputs, and facilitating essential imports.
Structural reforms are crucial to strengthen resilience against future shocks. These include climate adaptation measures, crop insurance schemes, disaster financing frameworks, and closer coordination between monetary and fiscal policies.
ICMA concludes that while flood-driven inflation cannot be avoided in the short term, combining modest rate cuts, targeted financing, and coordinated fiscal measures could stabilize prices, protect livelihoods, and accelerate Pakistan’s recovery.
ICMA MPS Review Download Link:
https://www.icmainternational.com/News_Pdf/ICMAMPSRevieweighteenthissueSEP162025.pdf
