The International Monetary Fund (IMF) is currently reviewing Pakistan’s climate planning as part of its efforts to secure $1 billion in funding under the Resilience and Sustainability Facility (RSF).
This initiative aims to support countries in building resilience against climate-related challenges through long-term concessional financing.
Key Points of the IMF’s Engagement with Pakistan
- Climate Resilience Loan Request: Pakistan has requested $1 billion to address the impacts of climate change, with discussions focusing on climate adaptation and resilience infrastructure.
- IMF Technical Mission: A technical team from the IMF is engaging with key Pakistani ministries and provincial governments to discuss technical aspects of the RSF arrangement. This includes assessing climate-related public investment management and green budgeting strategies.
- Extended Fund Facility (EFF) Review: The IMF is also conducting a review of Pakistan’s $7 billion EFF program, which includes assessing progress on structural reforms and economic resilience.
- Climate Financing Strategies: Discussions include the introduction of a carbon levy, expansion of green budgeting, and strategies for managing environmental investments.
- RSF Funding Terms: The RSF offers funding with a 30-year repayment period, including a 10-year grace period, making it more favorable than EFF terms.
Global Context of Climate Financing
- Global Climate Finance: The global landscape of climate finance reached nearly $1.3 trillion annually in 2021/2022, with significant contributions from multilateral climate funds like the Green Climate Fund.
- Innovative Financing Instruments: There is a growing emphasis on using guarantees, local currency lending, and project development models to enhance climate finance accessibility and reduce risks.
The IMF’s engagement with Pakistan reflects broader global efforts to enhance climate resilience and align economic policies with climate commitments.