IMF says Pakistan's flood spending, budget agility to be reviewed

The International Monetary Fund expressed deep condolences on Saturday for the loss of life caused by Pakistan's devastating floods and said its upcoming Extended Fund Facility review mission will evaluate whether the country's fiscal policies and emergency provisions can effectively address the crisis, a senior IMF official said.

"The mission will assess whether the FY26 budget, its spending allocations and emergency provisions remain sufficiently agile to address the spending needs necessitated by the floods," said Mahir Binici, the IMF’s resident representative in Pakistan.

The flash floods have killed 972 people so far, according to Pakistan's National Disaster Management Authority.

The floods have destroyed crops, livestock and homes across Punjab province and are now pushing into Sindh, threatening fresh food inflation and deeper hardship in the cash-strapped South Asian nation.

Pakistan's central bank is expected to keep its key rate at 11% on Monday, a Reuters poll showed, as policymakers weigh inflation risks from crop losses against a slowing economy. An analyst estimated agricultural damage could shave up to 0.2 percentage points off growth this year, with reconstruction-led demand offering only partial offset.

IMF's board approved a fresh $1.4 billion loan in May to help Pakistan strengthen its economic resilience to climate vulnerabilities and natural disasters.

The disbursement of funds is contingent upon successful completion of reviews under the EFF, the official said.

The Global Climate Risk Index places Pakistan among the countries most vulnerable to climate change.