IMF $1B Loan for Pakistan’s Stability & Climate Change
According to sources, the visit will aim to conduct talks on a $1 billion additional loan facility to support Pakistan’s economic stability and growth.
Sources revealed that the loan negotiations will focus on climate change mitigation efforts, building on Pakistan’s request for climate financing submitted to the IMF last month.
As part of this initiative, the government has committed to allocating 1% of the country’s economy towards addressing climate change, sources added.
During the visit, IMF and Pakistani officials will discuss new concessional loans to support climate change initiatives and talks will also cover provincial budgets and their allocation for climate change measures.
Sources said that the delegation will review the existing IMF loan program and provide an initial briefing and discussions may address Pakistan’s tax revenue and potential shortfalls between July and September.
Pakistan receives first tranche of IMF loan
Earlier, the government of Pakistan sought an additional $2 billion from the IMF to address the impacts of climate change.
This development came after Pakistan’s initial request for climate financing was not immediately approved by the IMF, sources said.
Sources revealed that Pakistan took steps to address fiscal sustainability and mobilize revenue, including passing the FY24 budget, which advances a primary surplus of around 0.4 percent of GDP. The government has also committed to ensuring a market-determined exchange rate and reducing inflation.
On September 27, Pakistan requested an additional $1.5 billion loan from the IMF to combat the impacts of climate change in the country.
The loan will support Pakistan’s Climate Resilience and Sustainability Facility, which aims to promote economic stability and sustainable development in the country.
It is important to mention here that the International Monetary Fund (IMF) Executive Board on September 25 approved Pakistan’s 37-month Extended Fund Facility (EFF) arrangement of about US$7 billion.
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