Pakistan likely to impose carbon levy in upcoming budget

ISLAMABAD: Pakistan is considering imposing a carbon levy in the upcoming budget for the fiscal year 2025-2026, ARY News reported citing sources.

According to sources, the proposal will be discussed with the International Monetary Fund (IMF) delegation during their upcoming visit.

The IMF team, scheduled to arrive in Pakistan on February 28, will hold technical talks with federal and provincial authorities from February 24 to 28. The discussions will focus on green budgeting, climate spending, and the imposition of a carbon levy.

Additionally, the IMF delegation will provide proposals for expanding green budgeting in the upcoming budget. Pakistan is expected to secure a concessional loan program worth $1-1.5 billion, subject to negotiations with the IMF.

Earlier, the International Monetary Fund (IMF) confirmed that a delegation will visit Pakistan in mid-March to review the country’s $7 billion loan program.

According to IMF representative, Mair Benitez, the delegation will hold discussions with Pakistani authorities on the first review under the loan program.

Also read: Pakistan restructures FBR on IMF demand

In addition to reviewing the loan program, the IMF delegation will also discuss Pakistan’s request for climate financing. Furthermore, a technical team from the IMF will visit Pakistan at the end of February to discuss technical aspects of climate financing.

The technical team will assess potential arrangements for climate financing and engage in discussions on related technical matters.

Pakistan made a formal request in October last year for around $1 billion in funding from the IMF under the trust, to address the nation’s vulnerability to climate change.

The country’s economy is on a long path to recovery after being stabilized under a $7 billion IMF Extended Fund Facility it secured late last year.

The Global Climate Risk Index places Pakistan among the countries most vulnerable to climate change.

Floods in 2022, which scientists said were aggravated by global warming, affected at least 33 million people and killed more than 1,700. The country’s economic struggles and high debt burden impinged its ability to respond to the disaster.