WASHINGTON, Oct 24, 2024: Pakistan is seeking approximately $1 billion from the International Monetary Fund’s (IMF) Resilience and Sustainability Trust (RST) to mitigate climate risks, as announced by Finance Minister Muhammad Aurangzeb in an interview with Reuters.
This facility provides long-term, concessional funding for climate-related initiatives such as adapting to climate change and transitioning to cleaner energy sources.
Pakistan has already secured a $7 billion bailout from the IMF, but is now looking to tap into the RST for additional support. The country’s vulnerability to climate change, as highlighted by the Global Climate Risk Index, makes it an ideal candidate for this facility. The devastating floods in 2022, exacerbated by global warming, affected over 33 million people and resulted in more than 1,700 deaths, underscoring the need for urgent action.
In addition to the IMF funding, Pakistan is also exploring other financing options, including a Panda bond issuance in China’s capital markets. The country aims to raise $200-250 million by the end of June, with the Asian Infrastructure Investment Bank providing credit enhancement. This would not only diversify Pakistan’s funding sources but also reduce borrowing costs.
According to Aurangzeb, Pakistan’s goal is to access the world’s second-largest and deepest capital market, rather than focusing on a specific issuance size. The country is also in talks with other institutions to secure credit enhancements, which would boost the bond’s rating and attract more investors. By leveraging these funding opportunities, Pakistan hopes to bolster its climate resilience and drive economic stability.