Pakistani authorities mull options to augment IMF bailout with climate finance.
Pakistan is actively considering avenues to increase the forthcoming International Monetary Fund (IMF) bailout package from an initial $7.5 billion to a potential $8 billion.
This augmentation strategy involves the pursuit of climate finance alongside the Extended Fund Facility (EFF).
The move comes amidst discussions that ensued during the finalization of the ongoing Standby Arrangement (SBA) program in June 2023.
Despite initial attempts, the IMF declined Pakistan’s request for an increase, citing the short-term nature of the SBA.
However, they hinted at revisiting the possibility in subsequent engagements.
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Drawing inspiration from neighboring Bangladesh, Pakistani officials are now exploring similar pathways to expand the size of their impending IMF program.
This entails delving into climate finance options to fortify the Extended Fund Facility (EFF) program.
Of particular interest is the Resilience and Sustainability Facility (RSF) offered by the IMF, which provides affordable long-term financing to nations committed to reforms addressing climate change and pandemic preparedness.
To qualify for access to the RSF, countries must enact high-quality policy reforms targeting long-term structural challenges such as climate change mitigation and pandemic readiness.
Furthermore, eligibility hinges upon the existence of an ongoing IMF-supported program boasting upper credit tranche quality policies (UCT program).
The RSF offers a range of support mechanisms, including financial and non-financial assistance, under specific IMF arrangements.
Conditions tied to reform progress are rigorously monitored, with reviews conducted in tandem with those of the UCT program.
Pakistan’s recent approval of the Public Investment Management Assessment (PIMA) framework, incorporating the Climate-PIMA module under IMF guidance, underscores the nation’s commitment to bolstering public investment management.
This initiative aims to bolster economic growth, enhance service delivery, and fortify infrastructure resilience in the face of climate change.
Pakistani authorities are actively exploring avenues to augment their forthcoming IMF bailout package by integrating climate finance strategies.
As Pakistani authorities mull options to augment IMF bailout with climate finance, such measures could potentially elevate the Extended Fund Facility program’s size to $7.5 or $8 billion, signaling a proactive stance towards economic stability and climate resilience.
