The government is considering asking for an additional $2 billion from the IMF in climate finance

• FinMin Aurangzeb will attend the annual meeting of the IMF and the World Bank in the US.
• The finance czar will address the issue of climate finance during the hearing.
• Islamabad is eyeing an additional $1.5 billion to $2 billion in loans from the lender.
  

ISLAMABAD: After managing to secure a much-needed fresh bailout from the International Monetary Fund (IMF), the incumbent government is considering exploring the possibility of augmenting the lender’s $7 billion Extended Fund Facility (EFF) program with climate finance from $1.5 to $2 billion on the sidelines of the upcoming annual meeting of the IMF and the World Bank in Washington; The News reported on Tuesday.

“We will bring it up as a point of discussion, but it is too early to talk about quantum,” said Finance Minister Muhammad Aurangzeb, who was on his way to the United States to attend the high-level gathering.

The publication added that Islamabad may ask the Fund to add climate finance to the existing EFF, pushing the total size of the lender’s program to $9 billion.

Islamabad has been working to implement what were considered “stringent” terms to complete the loan program – agreed in July – and received the first tranche of $1.03 billion (SDR 760 million after the new loan program was approved by the Executive Council of the IMF last month.

The 2024 Annual Meetings of the IMF and the World Bank Group will convene in Washington, DC from October 21-26, bringing together influential leaders from government, business, international organizations, civil society and academia .

FinMin Aurangzeb has already left the federal capital along with his entourage to attend the upcoming IMF/World Bank annual meeting.

On the lending side, there is an IMF instrument under the Resilience and Sustainability Facility (RSF), which provides affordable long-term financing to countries undertaking reforms to reduce risks to future balance of payments stability, including those that related to climate change and the pandemic. readiness.

By reducing potential balance of payments risks, an RSF agreement aims to contribute to the long-term stability of the Balance of Payments (BoP).

In some cases, RSF arrangements may also have an impact on short- and medium-term BoP needs.

IMF staff should illustrate in the program documentation the risks to future BoP stability that may imply long-term BoP financing needs related to the relevant long-term structural challenge.

These risks are an identification criterion for an RSF setting (although not related to access levels, which are governed by separate criteria). Leveraging available diagnostics and modeling tools, staff should attempt to visualize the challenges to future BoP stability and document the relevance of the proposed reform package to mitigate these future risks. Quantification, if possible, is expected but not required due to inherent challenges.

Where appropriate, any immediate short- and medium-term financing needs of the BoP arising from the implementation of reforms supported by the RSFs. Staff should provide accurate estimates and include them in the budget or BoP.

Any positive impact on the BoP in the short to medium term from reforms supported by the RSF should also be captured to the extent possible.

According to the RSF, the IMF makes it mandatory that the debt must be assessed as sustainable in the medium term for the staff and the Governing Council to recommend it to approve a new RSF request, the increase in access and the completion of reviews under the RSF arrangements.