Islamabad, Feb 24: Pakistan has initiated crucial negotiations with the International Monetary Fund (IMF) for the release of $1-1.5 billion in climate financing, as the lender’s mission begins consultations with key government stakeholders. The talks, spanning over three weeks, will engage officials from the finance, planning, climate change, petroleum, and water resources ministries, along with the Federal Board of Revenue, disaster management agencies, and provincial governments.
This round of discussions comes ahead of the IMF staff mission’s scheduled arrival in early to mid-March for the first biannual review of Pakistan’s $7 billion bailout program. The negotiations will focus on integrating climate-responsive investments into the upcoming Public Sector Development Programme (PSDP), with a particular emphasis on high-impact infrastructure, foreign-funded projects, and initiatives targeting the 20 least-developed districts across the country.
The IMF has acknowledged the potential benefits of these climate-related investments, highlighting their role in strengthening Pakistan’s resilience against environmental shocks and accelerating economic recovery. However, the lender has also cautioned that additional borrowing to finance climate adaptation measures could further strain Pakistan’s already high debt levels. To mitigate these risks, the IMF has stressed the need for fiscal consolidation and structural reforms to ensure long-term economic stability.
With Pakistan’s vulnerability to climate change increasingly affecting economic growth and infrastructure, securing climate financing has become a priority for the government. By aligning development projects with climate resilience strategies, the country aims to enhance disaster preparedness while ensuring sustainable economic progress. However, the challenge remains in balancing these essential investments with fiscal discipline, a key concern in the ongoing IMF negotiations.
