Islamabad: The International Monetary Fund (IMF) has expressed deep condolences over the human and financial losses caused by Pakistan’s recent devastating floods and stated that the upcoming Extended Fund Facility (EFF) review mission will examine whether the Government of Pakistan’s budget and emergency fiscal measures are sufficiently flexible and effective to meet post-flood needs.

The IMF’s Resident Representative in Pakistan, Maher Binchi said:

“The mission will assess whether the FY2026 budget, its allocations and emergency provisions are adequate and functional in addressing the crisis caused by the floods.”

International Monetary Fund (IMF)

Latest Flood Situation

  • According to the National Disaster Management Authority (NDMA), 972 people have lost their lives due to the floods so far.
  • In Punjab, crops, livestock and housing have been severely damaged while floodwaters are moving towards Sindh.
  • Some experts have also warned that agricultural losses may lead to rising food prices and a surge in inflation.

Possible Economic Impact

Economic IndicatorCurrent Target/RateLikely Post-Flood Change
GDP Growth Rate4.2%Downward, negative impact of up to 0.2 percentage points
Inflation (CPI)5%–7%Risk of exceeding target
Agricultural Exports (esp. rice)StableSignificant decline expected
ImportsPolicy aimed at controlMay rise due to agricultural losses
Trade DeficitAlready widenedRisk of further expansion

Policy Response and Interest Rate

  • According to experts, the State Bank is likely to maintain the policy rate at 11% in its upcoming Monday announcement.
  • The rationale for no change, policymakers are balancing concerns of inflation from crop losses against pressures from a slowing economy.
Flood situation in Pakistan

Financial Support of IMF

  • In May 2025, the IMF Board approved $1.4 billion for Pakistan to strengthen resilience against climate risks and natural disasters.
  • The provision of funds will only take place if Pakistan completes successful assessments under the EFF.
  • The mission is scheduled to reach Islamabad on September 25, 2025. So that in the second review meeting, the budget, tax reforms, agricultural income tax (AIT) and other aspects of the economy can be discussed in detail.

Key Points at Glance

  • 972 deaths reported with severe agricultural damage from floods.
  • IMF, Budget’s emergency flexibility will be assessed.
  • GDP, inflation, exports and imports targets likely to be revised downward.
  • Agricultural income tax (AIT) expected to be on the agenda.
  • Disbursement of funds tied to successful reviews.
  • Pakistan ranks among countries most vulnerable to environmental risks, according to the Climate Risk Index.