IMF Reviews Pakistan Flood Spending Amid 972 Deaths

The International Monetary Fund (IMF) has expressed deep condolences over the devastating floods in Pakistan that have killed 972 people and caused widespread destruction of crops, livestock, and homes, particularly in Punjab and Sindh provinces. The IMF's upcoming Extended Fund Facility (EFF) review mission will assess whether Pakistan's fiscal policies, including the FY26 budget and emergency spending provisions, are sufficiently agile to address the urgent financial needs arising from the floods. Pakistan's central bank is expected to keep its key interest rate at 11 percent, balancing inflation risks from agricultural losses against a slowing economy, with estimates suggesting the flood damage could reduce GDP growth by up to 0.2 percentage points. The IMF board approved a $1.4 billion loan in May under the Resilience and Sustainability Facility to help Pakistan strengthen its economic resilience to climate vulnerabilities, with disbursement contingent on successful EFF reviews. The floods have intensified food inflation and economic hardship in the country, which the Global Climate Risk Index identifies as one of the most vulnerable to climate change. The IMF emphasized the importance of discussing relief initiatives in coordination with the ongoing financial support framework to protect vulnerable populations and foster national resilience.