Pakistan and IMF to Start Negotiations for $1.5 Billion Climate Financing Today

A mission from the International Monetary Fund (IMF) will begin negotiations for the release of $1-1.5 billion in climate financing starting today. The lender will engage finance, planning, climate change, petroleum, and water resources ministries along with the Federal Board of Revenue, disaster management agencies, and provincial governments. The discussions would span over three weeks before the arrival of the IMF staff mission in early to mid-March for the first biannual review of its $7 billion bailout. The government has incorporated climate-responsive projects into the upcoming Public Sector Development Programme (PSDP), prioritizing high-impact infrastructure, foreign-funded initiatives, and projects in 20 least-developed districts. The IMF has assessed that such investments would improve Pakistan’s ability to withstand climate shocks and ensure faster economic recovery. However, it warned that additional borrowing for climate resilience could increase debt levels, necessitating fiscal consolidation and structural reforms to maintain economic stability.