ISLAMABAD: Pakistan has stressed the need for climate financing to the International Monetary Fund (IMF), highlighting the country’s vulnerability to climate change, ARY News reported citing sources.
According to sources, the IMF agreed to provide $1 billion in climate financing after the first quarterly economic review, expected to occur in March.
Sources revealed that the climate financing will be part of the Extended Fund Facility (EFF) loan program, which will become the largest program in Pakistan’s history once approved.
The economic team and IMF mission will conduct the first quarterly review in March to assess Pakistan’s progress, sources added.
However, recent talks between Pakistan and the IMF mission made little progress on climate financing. The IMF has made the disbursement of climate financing conditional on Pakistan’s implementation of specific targets.
The IMF has agreed to Pakistan’s proposal to allocate 1% of its GDP to climate change expenditure, demonstrating a shared commitment to addressing the climate crisis.
Last week, the International Monetary Fund (IMF) said it held constructive talks with authorities in Pakistan on economic policy and reform efforts to reduce vulnerabilities during an unscheduled staff visit.
The unusual visit from Nov 12 to Nov 15 discussed a $7-billion bailout within six weeks of its approval by the IMF board, but came too early for the first review of the Extended Fund Facility (EFF), due in the first quarter of 2025.
Also read: Constructive talks held with Pakistan officials, says IMF
“We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 EFF,” Nathan Porter, the chief of the IMF’s Pakistan mission, who led the talks, said in a statement.
The constructive discussions on economic policy and reform efforts to reduce vulnerabilities would help to lay the basis for stronger and sustainable growth, he added.
Climate fund
On September 27, Pakistan requested an additional $1.5 billion loan from IMF to combat the impacts of climate change in the country.
During a meeting with IMF Managing Director Kristalina Georgieva, Prime Minister Shehbaz Sharif discussed the need for urgent action to control climate change in Pakistan.
The loan will support Pakistan’s Climate Resilience and Sustainability Facility, which aims to promote economic stability and sustainable development in the country.
It is important to mention here that the International Monetary Fund (IMF) Executive Board on September 25 approved Pakistan’s 37-month Extended Fund Facility (EFF) arrangement of about US$7 billion.
The 37-month Extended Fund Facility arrangement aims to support Pakistan’s economic stability and growth, with key policy goals including sustainable public finances, reduced inflation, and strengthened external buffers.
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