Pakistan to seek additional IMF climate financing as well

F.P. Report

ISLAMABAD: Pakistan will seek assistance from the International Monetary Fund (IMF) under two heads – extended fund facility (EFF) and additional climate financing – as Finance Minister Muhammad Aurangzeb is in Washington to hold talks with the world’s top lender for a new bigger and longer programme, sources say.

Islamabad is currently awaiting the release of $1.1 billion under the stand-by arrangement (SBA) which was inked during the last days of the PDM-led coalition government and remained effective from July 1, 2023 to March 31, 2024.

A staff-level agreement was reached after an IMF team headed by Nathan Porter visited Islamabad last month for the purpose and the Washington-based financial institution is expected to give final approval this week, which will lead to its disbursement.

However, the government has made it clear that Pakistan badly needs another IMF bailout to fix its finances and meet the domestic and external debt obligations.

The sources in finance ministry say the finance minister will submit the two applications for financial assistance during the talks to be held next after the completion of the annual spring meetings of IMF and World Bank.

A briefing has been prepared for the IMF on the steps taken or to be taken to tackle the climate change impacts and allocations in the next budget in this connection. It would be in addition to the main IMF programme sought under the EFF.

The Pakistani side will also share the details of the economic indicators with the IMF to convince them for a new deal by explaining the targets set by the elected government which is going ahead with the two main demands – energy tariff hikes and privatisation, especially the PIA.

In case of progress in these talks, an IMF mission will arrive in Pakistan next month to work with the financial wizards in Islamabad on the new deal as well as the next budget.

At the same time, the Pakistani delegation will also ask the World Bank to increase financing by holding detailed talks with its officials.