Pakistan weighs asking additional $2 billion from IMF

ISLAMABAD: After securing a critical bailout from the International Monetary Fund (IMF), the Pakistani government is now exploring the possibility of augmenting the $7 billion Extended Fund Facility (EFF) with an additional $1.5 to $2 billion in climate finance.

This proposal is expected to be raised during the upcoming annual meetings of the IMF and World Bank in Washington from October 21 to 26.

Finance Minister Muhammad Aurangzeb, en route to the US for the meetings, confirmed that climate finance discussions would be on the agenda.

However, he noted that it was too early to specify the exact figures. Islamabad may seek to increase the total size of the programme to $9 billion by including climate finance.

The government has been working diligently to meet the conditions set by the IMF under the EFF, which was agreed upon in July. The country received the first tranche of $1.03 billion following the approval of the programme by the IMF’s Executive Board last month.

The proposed climate finance would likely be sought through the IMF’s Resilience and Sustainability Facility (RSF), which provides long-term, affordable financing to countries that are addressing structural challenges such as climate change.

The RSF aims to reduce future risks to balance of payments (BoP) stability, which could also help ease short- to medium-term financial pressures.

As Pakistan faces increasing challenges due to climate change, securing additional financing under the RSF could provide much-needed support to strengthen the country’s financial stability. However, any request for RSF financing would require a sustainable debt assessment before approval.

With high-level discussions planned in Washington, Pakistan hopes to leverage these meetings to bolster its financial position while addressing the pressing climate-related challenges affecting its economy.

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