IMF to Assess Pakistan‘s Budget Flexibility Amidst Devastating Flood Response
ISLAMABAD – The International Monetary Fund (IMF) will evaluate the agility of Pakistan’s fiscal policies and emergency spending in light of the recent catastrophic floods, a senior IMF official stated Saturday. The assessment will be a key component of the upcoming review of Pakistan’s Extended fund Facility (EFF) program.
Mahir Binici, the IMF’s resident representative in Pakistan, indicated the review mission will specifically examine whether the fiscal year 2026 budget, including its spending allocations and emergency provisions, can adequately address the financial needs stemming from the flood damage.
the floods have already claimed 972 lives, according to the National Disaster Management Authority, and have caused widespread destruction of crops, livestock, and homes across Punjab and Sindh provinces. Concerns are mounting over potential fresh food inflation and increased hardship.
Pakistan secured a $1.4 billion loan from the IMF in May, designed to bolster the nation’s economic resilience to climate change and natural disasters. Though, disbursement of thes funds remains contingent upon triumphant completion of ongoing EFF reviews.
Economic analysts estimate the agricultural damage could reduce Pakistan’s economic growth by up to 0.2 percentage points this year, with reconstruction efforts expected to offer only limited offsetting benefits. The State Bank of Pakistan is anticipated to maintain its key interest rate at 11 percent on Monday, balancing inflation risks from crop losses against a slowing economy.
Pakistan is recognized as one of the countries most vulnerable to climate change, according to the Global Climate Risk Index.
