Pakistan to issue first-ever green bonds to meet IMF climate financing condition

The Pakistani government plans to sell "green bonds" on the Pakistan Stock Exchange for the first time in the country’s history before the end of this month, meeting one of the key conditions set by the International Monetary Fund (IMF) to secure climate financing.

Sources at the Ministry of Finance said the government aims to issue the bonds by the third week of this month, amounting to PKR 30 billion.

The issuance of climate-related bonds has been a key requirement of the IMF for securing Climate Resilience Funding.

The IMF Board of Directors is set to meet on May 9 to review the first tranche of the Extended Fund Facility (EFF). Alongside this, the board will also assess the Resilience Sustainability Fund (RSF).

The IMF reached a staff-level agreement in March, under which $1.3 billion in assistance is expected to be approved and disbursed over 28 months.

The RSF will support Pakistan’s efforts to build resilience against natural disasters, enhance budget and investment planning for climate adaptation, improve water resource efficiency, strengthen climate risk disclosure architecture, and align energy sector reforms with mitigation targets.

Funds raised through the issuance of sukuk bonds will be allocated to three hydro projects in Punjab, Sindh, and Balochistan. These projects aim to enhance reliance on green energy, increase water storage capacity, and boost electricity generation.

As part of its commitment to the IMF, the government is scaling up climate reform efforts to reduce vulnerability to natural disasters and build climate resilience. Supported by the RSF, Pakistan's program includes:

• Strengthening public investment processes to prioritize projects that enhance disaster resilience
• Improving the efficiency of scarce water resources through better pricing mechanisms
• Enhancing intergovernmental coordination on disaster financing
• Improving financial and corporate climate-related risk disclosure
• Promoting green mobility to mitigate pollution and health hazards