Pakistan requests IMF to provide additional USD 1.5 billion loan to combat climate change

Pakistan Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the 79th session of the United Nations General Assembly (UNGA) in New York. During the meeting, Shehbaz Sharif spoke about the need for urgent action to control climate change in Pakistan.

The loan will support Pakistan's Climate Resilience and Sustainability Facility, which has the goal to promote economic stability and sustainable development in the country

Sharif praised the IMF's technical assistance and capacity-building programs, which have helped to strengthen the institutions of Pakistan and improve its economic management, according to ARY News report.

Georgieva stressed the importance of maintaining macroeconomic stability and promoting inclusive and sustainable growth. During the meeting, the two sides spoke about the urgent need to mobilise adaptation financing for climate change.

PM Sharif agreed to have the Finance Minister take up the critical issue with senior management at the IMF during the Annual Meetings in October. Shehbaz Sharif and Kristalina Georgieva agreed to boost cooperation between the government and the IMF to promote economic stability and growth, as reported by ARY News.

Notably, the IMF released the first tranche of USD 1 billion to Pakistan, which approved a USD 7 billion loan for Islamabad under the Extended Fund Facility, according to ARY News reported.

Earlier this year, the Shahbaz Sharif government faced a weak start by securing just USD 436.4 million in foreign assistance and grants in July, nearly 85 per cent less than the amount received in the same month last year, Dawn reported.

The USD 426 million in foreign loans and USD 10.5 million in grants during the first month of the current fiscal year seem insignificant against the ambitious USD 19.4 billion target for foreign assistance set for FY25.

In July last year, Pakistan received over USD 2.89 billion, largely due to the signing of the 9-month USD 3 billion Stand-By Arrangement (SBA) with the IMF, which enabled Pakistan to secure a significant USD 2 billion time deposit from Saudi Arabia.

Total inflows in July 2023 reached USD 5.1 billion, including USD 1.2 billion from the IMF and another USD 1 billion from the UAE. Earlier in August, Pakistan's Ministry of Economic Affairs said that Pakistan received USD 436.39 million in total foreign inflows, compared to USD 2.89 billion in the same month last year.

The Economic Affairs Division (EAD) highlighted that the majority--USD 307 million--came from project financing, a 52 per cent decline from the USD 640 million received in July last year, Dawn reported. (ANI)