Pakistan-IMF talks could bring $1.2 billion in climate funding

A delegation from the International Monetary Fund (IMF) has begun reviewing Pakistan’s request to receive approximately $1.2 billion in funding to counter climate issues. Discussions started on Monday in the federal capital, Islamabad, and will extend into next month.

According to reports, the IMF’s delegation is expected to collaborate with the ministries of climate change, water resources, planning, petroleum and finance. Moreover, disaster management agencies and provincial governments will also get a chance to discuss outstanding matters with the IMF’s technical team.

Mahir Binici, the IMF’s resident representative in Islamabad, commented on the duration of the discussions. According to Mahir, Islamabad-IMF talks on the issue of additional funding are expected to take approximately three weeks.

Reports claim that the IMF is expected to conduct a policy review next week to evaluate how well Pakistani authorities have performed as per guidelines set under the existing seven-billion-dollar Extended Fund Facility (EFF). The review team for the EFF program is expected to arrive by the middle of March for discussions.

This team will also assess Islamabad’s request to aid the cash-strapped country by creating a Resilience and Sustainability Facility (RSF). RSF funding is allocated to countries that dedicate efforts to enact ‘high quality’ reforms which will foster resilience against climate catastrophes.

This spells great news for Pakistan – A country plagued by violent earthquakes and destructive flooding. Furthermore, the terms of the loan are beneficial as it has a 10-year grace period while being much cheaper than EFF loans.

Authorities have already suggested that natural disaster-prone countries invest one percent of their gross domestic product (GDP) in building resilience against climate issues. According to the IMF, the aforementioned investments could mitigate 33 percent of the negative growth impact of a violent natural disaster.

The Ministries of Planning and Finance have reportedly made arrangements to complete the Climate-related Public Investment Management Assessment to help prepare future budgets under IMF and World Bank-prescribed guidelines.

The Ministries of Planning and Finance have reportedly made arrangements to complete the Climate-related Public Investment Management Assessment which will prepare future budgets under IMF and World Bank-prescribed guidelines.

Many criticise authorities because they believe Pakistan is losing its grip on its own fiscal policy because of the debt burden the economy carries. Forming federal budgets after receiving the green light from international lenders does little to dispel the aforementioned criticism, instead validating it.

Lawmakers recently proposed an electricity tariff cut. However, analysts highlighted how the IMF blocked a similar proposal in the near past. However, while many do not consider loans to be a viable solution in the long term, there is little cash-strapped Pakistan can do under existing economic circumstances.

Nevertheless, Pakistan has been successful in achieving most of the prescribed targets which international lenders had set for it. As per reports, a major requirement that remains incomplete surrounds Islamabad’s amendments to the Sovereign Wealth Fund (SWF).