IMF to Review Pakistan’s Flood Spending Amid Rising Economic Strain
Islamabad / Global – Pakistan is under scrutiny from the International Monetary Fund (IMF), which will review the country’s fiscal response to devastating floods as part of its upcoming Extended Fund Facility (EFF) mission.
The floods, which have claimed the lives of 972 people and wrought major destruction across Punjab and Sindh, have worsened food inflation and deepened economic stress in a nation already grappling with financial fragility.
Key points:
The IMF loan of US$1.4 billion, approved in May, was intended to boost Pakistan’s resilience to climate disasters. Further disbursements will depend on how well Pakistan shows it can adjust its FY2025/26 budget to respond to emergencies.
Agriculture, already one of Pakistan’s economic backbones, has been severely damaged, likely reducing GDP growth by about 0.2 percentage points, though rebuilding efforts could mitigate part of the loss.
Inflation, especially food prices, has surged in affected regions. The central bank is expected to maintain interest rates at 11% despite the growth pressures.
Why It Matters:
This story has global relevance because it touches on climate crisis response, international financing mechanisms, and how vulnerable countries are forced to balance disaster recovery with macroeconomic stability. It also highlights the increasing demand for countries to build budget systems that are flexible during emergencies.
Pakistan’s response over the coming months—how swiftly, transparently, and effectively it spends on flood recovery—could determine not only further IMF support but also its ability to protect its economy and people against future climate shocks.
