Pakistan looking to secure $1bn in ‘climate cash’ from IMF

The federal government is targeting around $1 billion in a formal request for funding from the IMF facility after the lender asked Islamabad to spend one per cent of the GDP on climate resilience.

“We have formally requested to be considered for this facility,” Finance Minister Muhammad Aurangzeb told Reuters in an interview on the sidelines of the IMF/World Bank autumn meetings in Washington.

The International Monetary Fund had already agreed a $7 billion bailout for Pakistan, but has further funding available via its Resilience and Sustainability Trust (RST).

The RST, created in 2022, provides long-term concessional cash for climate-related spending, such as adaptation and transitioning to cleaner energy.

“We think we are a very good candidate to be considered for a facility like this,” Aurangzeb said, adding that they aim to conclude the request in the coming months.

Pakistan is one of the most vulnerable countries to climate change according to the Global Climate Risk Index.

Floods in 2022, which scientists said were aggravated by global warming, affected at least 33 million people and killed more than 1,700. The country’s economic struggles and high debt burden impinged its ability to respond to the disaster.

Pakistan is also in talks with the Asian Infrastructure Investment Bank (AIIB) for a credit enhancement for a planned Panda bond, Aurangzeb said. It is targeting an initial issuance of $200-250 million by the end of June.