ISLAMABAD; The International Monetary Fund (IMF) on Saturday extended its condolences over the heavy loss of life caused by the recent devastating floods in Pakistan and announced that its upcoming Extended Fund Facility (EFF) review mission will examine whether the government’s fiscal and emergency measures are adequate to deal with the crisis.
“The mission will evaluate if the FY26 budget, including its expenditure allocations and emergency provisions, remains flexible enough to meet the urgent spending needs created by the floods,” said Mahir Binici, the IMF’s resident representative in Pakistan.
According to the National Disaster Management Authority (NDMA), flash floods have so far claimed 972 lives. The disaster has swept away crops, livestock, and homes across Punjab and is now advancing into Sindh, raising fears of renewed food inflation and worsening hardship for millions.
At the same time, the State Bank of Pakistan is expected to maintain its key policy rate at 11 percent on Monday, a Reuters poll suggested, as policymakers grapple with inflationary risks from crop damage while also contending with slowing economic growth.
Economists estimate that the destruction of farmland could reduce growth by as much as 0.2 percentage points this year. While reconstruction and rehabilitation efforts may provide a temporary boost to demand, they are unlikely to fully offset the economic drag.
Earlier in May, the IMF board approved a fresh $1.4 billion loan package to help Pakistan strengthen its resilience against climate shocks and natural disasters. However, the disbursement of funds depends on the successful completion of periodic reviews under the EFF, the Fund clarified.
The Washington-based lender also noted that Pakistan ranks among the countries most vulnerable to climate change, according to the Global Climate Risk Index—an assessment that highlights the urgent need for both fiscal preparedness and long-term climate adaptation strategies.
