Pakistan Seeks Additional $2 Billion from IMF to Address Climate Change

Islamabad: Pakistan is seeking an additional $2 billion from the International Monetary Fund (IMF) to combat the severe effects of climate change. Finance Minister Muhammad Aurangzeb plans to make this request during the annual IMF meetings taking place from October 21 to October 26 in Washington, DC.

Aurangzeb will head a delegation that includes key officials such as the finance secretary, economic affairs secretary, and the governor of the State Bank of Pakistan. The main sessions of the meetings are scheduled for October 22 to 25.

Previously, the IMF raised concerns regarding Pakistan's capacity to repay its external debt, labeling the situation as "fragile." According to the IMF, Pakistan's external financing needs are projected to reach $62.6 billion over the next three years under the Extended Fund Facility (EFF) program. This figure is anticipated to rise to $110.5 billion over the following five years, from 2024 to 2029.

For the current fiscal year, Pakistan's external funding needs are estimated at $18.813 billion, which is expected to increase to $20.088 billion in 2025-2026 and $23.714 billion in 2026-2027. Even after the conclusion of the three-year program, high financial demands are predicted to continue, with $24.625 billion required in 2027-2028 and $23.235 billion in 2028-2029.

The IMF has cautioned that Pakistan's ability to repay debts faces "major risks" and heavily depends on the implementation of policies and timely external financing. If approved, the Fund's exposure to Pakistan would reach Special Drawing Rights (SDR) 6,816 million (336% of quota) by September 2024.

The IMF emphasized that exceptionally high risks, including significant public debt, large financing needs, low reserves, and sociopolitical factors, could jeopardize policy implementation and diminish repayment capacity and debt sustainability.

Earlier in September, the IMF's Executive Board approved Pakistan's 37-month Extended Fund Facility (EFF) agreement, valued at around $7 billion.

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