IMF mission to assess floods impact on Pakistan's economy

Global lender expresses deep sorrow over loss of lives in Pakistan’s recent devastating floods

ISLAMABAD:

The International Monetary Fund (IMF) has expressed deep sorrow over the loss of lives in Pakistan’s recent devastating floods and announced that its second economic review mission will also assess the disaster’s impact on the economy, as well as the financial requirements for recovery and reconstruction.

According to sources, the IMF team will evaluate whether Pakistan’s fiscal policies and emergency measures are sufficient to deal with the crisis.

"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," said Mahir Binici, the IMF’s resident representative in Pakistan.

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The review will also examine the 2025–26 budget, its expenditure allocations, and relief provisions to determine how effectively they meet the urgent needs arising from the floods.

The government had already approached the IMF for relief measures following the destruction, and Prime Minister Shehbaz Sharif suspended electricity bill collections for August from consumers in flood-hit areas.

He directed distribution companies to comply immediately, adding that payments already made by affected consumers would be adjusted in their next bills.

The flash floods have killed 972 people so far, according to the National Disaster Management Authority.

The floods have destroyed crops, livestock and homes across Punjab province and are now pushing into Sindh, threatening fresh food inflation and deeper hardship in the cash-strapped South Asian nation.

State bank of Pakistan is expected to keep its key rate at 11% on Monday, as policymakers weigh inflation risks from crop losses against a slowing economy. An analyst estimated agricultural damage could shave up to 0.2 percentage points off growth this year, with reconstruction-led demand offering only partial offset.

It is noteworthy to mention that an IMF mission is scheduled to arrive in Islamabad on September 25 to begin talks for the release of the third loan tranche of $1 billion, subject to the completion of the second review of the economy. The IMF team will remain in Islamabad until October 8.

With additional input from Reuters