World Bank Warns Pakistan Over Diversion of Balochistan Flood Relief Funds

The World Bank has formally cautioned Pakistan against redirecting multibillion-rupee housing funds meant for flood-affected families in Balochistan toward infrastructure projects like roads and irrigation, warning that the shift could deepen poverty and disaster risks.

According to ProPakistani and News18, the controversy centers on the Integrated Flood Resilience and Adaptation Project (IFRAP), a $400 million World Bank-backed initiative designed to help the province recover from the devastating 2022 floods. The program’s housing component utilizes an owner-driven, community-led model to help households rebuild disaster-resistant homes.

However, a project steering committee headed by Planning Minister Ahsan Iqbal and Balochistan Chief Minister Sarfraz Bugti capped the housing component at roughly 69,000 homes. News18 reported that the committee ultimately rejected a proposed $180 million in additional financing that could have expanded housing reconstruction to more families.

According to a communication from the World Bank, as of June 22, 2026, the government restricted housing aid to 62,966 first-tranche beneficiaries, leaving 119,049 verified and eligible households without any identified financial backing. Subsidy support was similarly capped at 97,000 beneficiaries.

Data cited by ProPakistani shows that the affected households are among the region’s most vulnerable. About 84 percent of eligible beneficiaries are classified as ultra-poor, with 28 percent earning less than $30 a month and another 26 percent earning between $31 and $70. The demographic breakdown indicates that 39 percent are tenants, 37 percent are daily wage workers, and 8 percent are small farmers.

The World Bank raised concerns over how the funding changes and associated fraud and corruption issues were handled. World Bank Country Director Boloromaa Amgaabazar noted that the decision to cap and redirect housing support had been discussed with federal and provincial officials. However, the bank stated that the government’s public disclosure of the changes before a jointly agreed communication strategy was finalized created additional risks, particularly because many verified households had already completed required processes and signed project undertakings.

ProPakistani reported that by the agreed deadline, the project’s grievance management system had logged 66,120 complaints concerning the exclusions. The lender called for every complainant to be contacted individually and formally informed of the decision, with proof of communication shared with the bank.

Families left out of the program might find themselves compelled to borrow money, sell productive assets, or shift funds away from healthcare, education, and food in order to pay for makeshift repairs to their shelters, the World Bank cautioned. Those unable to rebuild could remain in damaged or unsafe homes, leaving them exposed to future floods, storms, earthquakes, and heatwaves. Furthermore, the lender pointed out that shutting out verified recipients risks fueling perceptions of unfairness, heightening social friction, and eroding public faith in government initiatives and development projects.

Beyond funding reallocations, the project has faced administrative turbulence and oversight disputes. News18 reported that Pakistan’s Economic Affairs Division recorded the lender’s concerns over changes to project leadership arrangements, alongside disagreements regarding management and implementation.

The initiative has also been entangled in investigations into irregularities. Officials have probed allegations of record tampering, duplicate claims, and multiple payments for the same houses, alongside claims that attempts were made to obstruct the probes. Discrepancies over completion figures further complicated the effort; meeting records showed 15,000 completed houses were presented to Prime Minister Shehbaz Sharif, while official figures indicated only 8,694 completed homes. In response, Planning Minister Ahsan Iqbal and Balochistan Chief Minister Sarfraz Bugti ordered an independent high-level inquiry, with the Planning Commission proposing the use of satellite imagery to independently verify ground construction.

The Planning Commission rejected the characterization that the housing program has been abandoned, maintaining that around 75,000 severely damaged houses remain under construction, with roughly 26,000 already finished, and that the originally approved target of 68,922 homes is protected.