Amidst financial challenges, Pakistani authorities are actively considering options to enhance the upcoming IMF bailout package from $7.5 billion to potentially $8 billion. One avenue being explored involves leveraging Climate Finance in conjunction with the Extended Fund Facility (EFF).
Official sources have disclosed to The News on Sunday that discussions regarding augmentation of the program’s size took place during the finalization of the previous Standby Arrangement (SBA) program in June 2023. However, the IMF deferred the request, citing the short-term nature of the program, hinting that such possibilities could be explored in subsequent arrangements.
Drawing inspiration from Bangladesh’s approach, Pakistani authorities are now contemplating avenues to increase the size of the forthcoming program, with a particular focus on integrating climate finance to bolster the Extended Fund Facility (EFF) program.
Under the Resilience and Sustainability Facility (RSF), an IMF instrument offers affordable long-term financing to countries committed to reforms aimed at mitigating risks to balance of payments stability, especially those pertaining to climate change and pandemic preparedness.
To access the RSF, eligible countries must implement high-quality policy reforms addressing long-term challenges related to climate change or pandemic preparedness, alongside an IMF-supported program with upper credit tranche quality policies (UCT program).
The augmentation of the IMF program could potentially increase from $6 billion to $7.5 or $8 billion, factoring in Pakistan’s quota available under Special Drawing Rights (SDRs).
Pakistan’s recent approval of the Public Investment Management Assessment (PIMA) framework, including Climate-PIMA, underscores its commitment to improving public investment management to support economic growth and climate resilience. The assessment, conducted under IMF guidelines, highlights ongoing efforts to strengthen public investment management and identifies areas for further institutional enhancement.
In a landscape where fiscal constraints coincide with the urgency of climate action, targeted reforms recommended by the IMF’s technical report aim to enhance public infrastructure sustainability and resilience to climate change.
As Pakistan navigates its economic challenges, the exploration of climate finance augmentation alongside IMF support signals a proactive approach towards addressing financial needs while prioritizing sustainable development goals.
Story By Mehtab Haider
