World Bank warns Pakistan that capping housing aid and diverting funds from Balochistan’s flood victims will deepen poverty, raise disaster risks and erode trust among the province’s poorest families.

Three years after the catastrophic 2022 floods devastated large parts of Pakistan, tens of thousands of verified flood-affected families in Balochistan face an uncertain future. The World Bank has expressed serious displeasure over the Pakistani government’s decision to restructure a major rehabilitation project, capping resilient housing support and redirecting remaining funds toward roads and irrigation. Officials and the lender warn the move risks compounding poverty, increasing vulnerability to future disasters and generating social tensions in one of the country’s most impoverished provinces.

The controversy centres on the Integrated Flood Resilience and Adaptation Project (IFRAP), a World Bank-backed programme originally designed to help Balochistan recover from the 2022 floods that submerged a third of Pakistan. Approved in May 2023 with an initial $213 million credit, the project later grew into a broader roughly $400 million envelope described by Pakistani authorities. Its housing component was meant to deliver multi-hazard resilient homes through a community-led, owner-driven model. Prime Minister Shehbaz Sharif had publicly promised a resilient house for every family that lost one.

Housing Needs Far Exceeded Original Plans

Early implementation revealed a far larger reconstruction requirement than first estimated. By mid-2025, the Housing Reconstruction Unit had validated more than 228,000 housing units against a baseline of around 284,000 households. The World Bank estimated the full cost of rebuilding all validated units at approximately $322 million. In response, a June 2025 restructuring shifted resources toward housing: community infrastructure was reduced, some underperforming components were dropped or scaled back, and the housing allocation rose significantly from an original $75 million (including $60 million in grants for about 35,100 units) to around $161 million. This was intended to support roughly 97,000 units.

Progress on housing, however, remained uneven. Commercial-bank delays slowed account openings and grant disbursements. Fiduciary risk ratings fluctuated, and verification challenges persisted. Allegations of record tampering, duplicate claims and multiple payments for the same units later surfaced, prompting investigations and a reported high-level inquiry after discrepancies appeared between figures presented to the Prime Minister (around 15,000 completed houses) and official records (closer to 8,694).

Steering Committee Caps Coverage and Redirects Funds

In June 2026 the project steering committee, chaired by Planning Minister Ahsan Iqbal and Balochistan Chief Minister Sarfraz Bugti, took a decisive turn. It capped the housing component at 69,000 homes, redirected remaining housing funds toward roads and irrigation, and declined a proposed $180 million in additional World Bank financing that could have extended coverage. The decision left more than 134,000 verified flood-affected families without the full assistance they had expected; World Bank correspondence specifically cited 119,049 verified and eligible households left without identified financing support.

The Planning Commission has offered a contrasting narrative. It maintains that the original ECNEC-approved housing target of 68,922 units remains protected, that roughly 75,000 fully damaged houses are under construction with about 26,000 completed, and that earlier shifts of money into housing from education, health, irrigation and other sectors had been driven by vested interests seeking to inflate the project’s “burn rate.” The commission argues the latest move corrects those imbalances rather than abandoning housing. Critics counter that the redirection pulls resources from the neediest component toward contractor-driven infrastructure.

World Bank Sounds Alarm on Poverty and Risk

World Bank Country Director Bolormaa Amgaabazar conveyed the institution’s strong concerns in formal communications to federal secretaries for economic affairs and planning and to Balochistan officials. She highlighted serious reputational risks and warned that excluding eligible households could deepen existing vulnerabilities. According to the Bank’s analysis, 84 per cent of eligible beneficiaries are ultra-poor and vulnerable: 28 per cent earn less than $30 a month and another 26 per cent between $31 and $70. Thirty-nine per cent are tenants, 37 per cent daily-wage labourers and 8 per cent small farmers – groups with limited savings, weak access to formal credit and low capacity to absorb further shocks.

The Bank cautioned that families denied resilient homes may divert scarce income from food, healthcare and education toward temporary shelter repairs, take on debt or sell productive assets. Those left in damaged or unsafe structures remain more exposed to recurring floods, storms, earthquakes and heatwaves. Exclusion also risks generating grievances, perceptions of inequity and erosion of trust in government institutions and development programmes. More than 66,000 exclusion-related grievances had already been registered in the project’s grievance system by the agreed cut-off date; the Bank insisted each complainant be contacted individually with verifiable evidence of notification.

Accountability Gaps Persist

Public accounting of the full money trail remains incomplete. The World Bank’s documents clearly show housing allocations rising after verification revealed greater need, then a later reduction in coverage. What happened to the funds freed by the June 2026 cap – how much was actually spent, how many houses were genuinely completed, which beneficiaries received grants, and where redirected resources ultimately went – has not been fully reconciled in publicly available records. Parliamentary committees had earlier raised concerns about beneficiary selection and implementation pace. Reports also note attempts to obstruct investigations and difficulties accessing records in Balochistan.

Senator Sanaullah Baloch and others have called for an immediate pause in further disbursements or restructuring pending an independent forensic review of expenditure, procurement, contracts, beneficiary lists and physical works, plus third-party verification of achievements and a full beneficiary audit.

Broader Stakes for Recovery and Trust

The 2022 floods caused estimated housing-sector damage in Balochistan exceeding $400 million. IFRAP was one element of Pakistan’s broader international recovery effort that secured more than $9 billion in pledges. Its owner-driven housing model was intended not merely to replace roofs but to build lasting resilience. Capping support for verified ultra-poor households, the World Bank argues, undermines those objectives and risks mutually reinforcing cycles of poverty and disaster vulnerability.

As the dispute continues between Pakistan’s federal and provincial authorities, Planning Commission and the World Bank, the families who completed verification, signed project undertakings and waited years for reconstruction remain largely without a voice.