Pakistan seeks additional $2 billion from IMF to combat climate change

Kathmandu: Pakistan is seeking an additional USD 2 billion from the International Monetary Fund (IMF) to tackle the devastating impacts of climate change, as per a report in ARY News.

Pakistan’s Finance Minister, Muhammad Aurangzeb, is set to request additional funds from the IMF during the annual IMF meetings scheduled for later this month, according to the news outlet that cited sources. Notably, the IMF and World Bank Group’s 2024 Annual Meetings will kick off on October 21 and wrap up on October 26 in Washington, DC.

The main ministerial sessions will take centre stage from October 22 to 25. Aurangzeb will lead a delegation that includes the finance secretary, economic affairs secretary, State Bank of Pakistan governor, and other key officials from the financial sector.

Earlier, the IMF had raised concerns over Pakistan’s ability to repay its external debt, labelling it as “fragile,” Geo News reported.

According to the IMF, Pakistan’s external financing requirements are projected to reach USD 62.6 billion over the next three years under the Extended Fund Facility (EFF) program. This amount is expected to further increase to USD 110.5 billion over five years, from 2024-2025 to 2028-2029.

Pakistan’s external funding needs are estimated to be USD 18.813 billion for the current fiscal year, increasing to USD 20.088 billion in 2025-2026 and USD 23.714 billion in 2026-2027. Even after the three-year program concludes, finance demands will remain high, with USD 24.625 billion required in 2027-2028 and USD 23.235 billion in 2028-2029.

The IMF had also issued a warning, saying that Pakistan’s ability to repay debts is subject to “major risks” and “heavily hinges on” the implementation of policy and timely external financing. With purchases related to the request, the Fund’s exposure would reach Special Drawing Rights (SDR) 6,816 million (336 per cent of quota) by September 2024.

‘Exceptionally high risks notably from high public debt and gross financing needs, low gross reserves and sociopolitical factors could jeopardise policy implementation and erode repayment capacity and debt sustainability,’ it added.

Earlier on September 25, the Executive Board of the International Monetary Fund (IMF) authorised Pakistan’s 37-month Extended Fund Facility (EFF) agreement, which is valued at around USD 7 billion.

RSS/ANI