Pakistan to request $2 billion in financial aid from the IMF at upcoming meetings.
Pakistan is gearing up to request an additional $2 billion in financial assistance from the International Monetary Fund (IMF) to address the escalating challenges posed by climate change.
According to ARY News, the country’s Finance Minister, Muhammad Aurangzeb, will make the formal plea during the IMF and World Bank Annual Meetings in Washington, DC, scheduled from October 21-26.
Aurangzeb, along with key financial officials—including the finance secretary, the economic affairs secretary, and the State Bank of Pakistan governor- will lead discussions with the IMF.
The additional funding request is seen as part of Pakistan’s larger strategy to manage the economic impact of recent climate-related disasters, such as floods and heatwaves.
IMF Raises Concerns on Debt Repayment
While Pakistan seeks further support, the IMF has already flagged concerns about the country’s external debt management.
The IMF’s Extended Fund Facility (EFF) program estimates Pakistan’s external financing needs to reach $62.6 billion in the next three years, potentially ballooning to $110.5 billion over five years (2024-2029).
The funding needs are anticipated to hit $18.8 billion in the current fiscal year and grow steadily in subsequent years.
Risks to Pakistan’s Debt Sustainability
The IMF has expressed concerns over Pakistan’s ability to sustain its debt repayment capacity, citing high public debt, low reserves, and socio-political instability.
The Fund emphasized that debt sustainability hinges on effective policy implementation and timely external financing.
Pakistan’s EFF Program and Climate Focus
Pakistan’s ongoing 37-month EFF program, approved in September, is worth $7 billion.
However, the government now seeks an additional $2 billion to mitigate climate change impacts, such as extreme floods and environmental disasters.
