The IMF will scrutinise Pakistan’s flood relief efforts spending, as the nation grapples with a devastating crisis threatening economic stability.
On Saturday, September 13, 2025, in Islamabad, the IMF announced a Pakistan flood budget review to assess fiscal policies and emergency provisions, following devastating floods that killed 972, as reported by the National Disaster Management Authority.
The IMF review of Pakistan’s flood relief efforts budget is critical for South Asia, where climate-driven disasters exacerbate economic vulnerabilities, highlighting the need for resilient fiscal strategies across the region.
IMF, Pakistan Flood: Assessing Flood Relief Efforts
The Pakistan flood relief efforts are under scrutiny as the International Monetary Fund prepares for its Extended Fund Facility (EFF) review mission, scheduled to begin on Thursday, September 25, 2025. Mahir Binici, the IMF’s resident representative in Pakistan, stated: “The mission will assess whether the FY26 budget, its spending allocations, and emergency provisions remain sufficiently agile to address the spending needs necessitated by the floods.” The floods, which began in late June 2025, have ravaged Punjab and are now threatening Sindh, causing widespread destruction of crops, livestock, and homes.
The \ flood death toll, reported at 972 by Pakistan’s National Disaster Management Authority, underscores the crisis’s severity. An estimated 2.5 million people have been rescued, with 4,700 settlements inundated, particularly in Khyber Pakhtunkhwa, where 504 deaths occurred due to cloudbursts in mid-August. The IMF, Pakistan flood budget review will evaluate whether fiscal policies can address these urgent needs while maintaining economic stability.
Economic Impacts and IMF Review
The IMF review of Pakistan’s flood response budget comes at a critical juncture. The floods have destroyed over 1 million acres of farmland in Punjab alone, with Pakistan’s Ministry of Agriculture estimating that 60% of rice, 30% of sugarcane, 35% of cotton, and 35% of national wheat stocks have been lost. An analyst projected that agricultural damage could reduce GDP growth by 0.2 percentage points in 2025, with reconstruction efforts offering only partial relief. According to the State Bank of Pakistan, the key interest rate is expected to remain at 11% on Monday, September 15, 2025, balancing inflation risks from crop losses against a slowing economy.
In May 2025, the IMF approved a USD 1.4 billion loan to bolster Pakistan’s resilience to climate vulnerabilities, with disbursements tied to successful EFF reviews. The IMF, Pakistan flood budget review will also examine the implementation of the Agriculture Income Tax (AIT), as Pakistan’s Finance Ministry noted potential adjustments to the macroeconomic framework, including GDP growth projections revised downward from 4.2% due to agricultural losses.
Government Measures and Relief Efforts
In response to the crisis, Prime Minister Shehbaz Sharif announced the suspension of electricity bill collections for August 2025 in flood-hit areas, with payments already made to be adjusted in future bills. According to the Prime Minister’s Office, “The government is committed to supporting flood-affected communities.” The IMF, Pakistan flood budget review will assess whether these emergency provisions are sufficient to meet the crisis’s demands, including reconstruction costs estimated in the billions of dollars.
The floods have heightened food inflation fears, with supply disruptions likely to push CPI-based inflation beyond the 5-7% target for the current fiscal year, as per Pakistan’s Finance Ministry. The trade deficit, already widened before the floods, further complicates recovery efforts.
Background
Pakistan ranks among the most climate-vulnerable countries, according to the Global Climate Risk Index, with recurring floods exposing gaps in infrastructure and economic resilience. The 2022 floods caused over USD 30 billion in damages, and the 2025 crisis threatens similar devastation. The IMF, Pakistan flood budget review follows a history of IMF-supported stabilisation programmes, with the country navigating fiscal constraints and reliance on international donors.
What’s Next
The IMF, Pakistan flood budget review, set to conclude on Wednesday, October 8, 2025, will determine the release of a USD 1 billion tranche from the USD 7 billion EFF. As Pakistan rebuilds, the IMF, Pakistan flood response will shape fiscal policies to address immediate relief and long-term climate resilience, critical for stabilising the economy.
Published in SouthAsianDesk, September 14th, 2025
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