IMF Reviews Pakistan's Fiscal Responses Amidst Catastrophic Floods

The International Monetary Fund has expressed deep condolences for the tragic loss of life due to the devastating floods in Pakistan, stating that its forthcoming Extended Fund Facility review will examine the country's fiscal strategies to tackle the crisis, according to a senior IMF official.

Mahir Binici, IMF's resident representative in Pakistan, highlighted the mission's focus on assessing whether the FY26 budget, spending allocations, and emergency provisions are flexible enough to meet the extraordinary funding needs prompted by the floods. The disaster has claimed 972 lives, as reported by Pakistan's National Disaster Management Authority.

These catastrophic floods have swept through Punjab province, ravaging crops, livestock, and homes, and are now advancing into Sindh, exacerbating food inflation and economic distress in the cash-strapped nation. Pakistan's central bank is predicted to maintain its key rate at 11%, considering the delicate balance between inflation from crop damage and a slowing economy, according to a Reuters poll. The IMF's recent $1.4 billion loan approval in May aims to bolster Pakistan's economic resilience amid climate threats. The Global Climate Risk Index identifies Pakistan as highly vulnerable to climate change.

(With inputs from agencies.)