Pakistan to get $1.3 billion IMF climate financing in tranches

The International Monetary Fund (IMF) will give Pakistan $1.3 billion under its Resilience and Sustainability Facility (RSF) in tranches over 28 months, Director of Communications Julie Kozack has said.

After Pakistan reached a staff-level agreement with the IMF over the weekend, some media reports gave the impression that Pakistan would receive the entire amount under the RSF in one go.

However, Kozack clarified that it was not the case. "For the RSF, over the length of the arrangement, again subject to approval by the IMF's Executive Board, the staff-level agreement references an amount of $1.3 billion and that access will be over the life of the RSF, delivered in tranches," she said.

The staff-level agreement for the first loan review of the Extended Fund Facility and the new RSF followed discussions between the authorities and an IMF delegation that visited the country from Feb 24 to March 14.

Upon the approval of the IMF's Executive Board, Pakistan will receive $1 billion, taking the total disbursement under the 37-month EFF to $2 billion.

The international lender emphasized that Pakistan must solidify the progress it has made in 1.5 years by building resilience by further strengthening public finances, ensuring price stability, rebuilding external buffers and eliminating distortions in support of stronger, inclusive and sustained private sector-led growth.

"The authorities reiterated their commitment to the EFF-supported program and plan to supplement their efforts by advancing reforms under the RSF-supported program aiming to address long standing economic vulnerabilities to climate shocks and build resilience," the IMF said.

The RSF-supported agenda outlines reforms in climate resilience. These include prioritizing disaster-resilient public investment, better water resource pricing, coordination on disaster financing, and promoting green mobility.

The interval between a staff-level agreement and the subsequent Executive Board meeting typically ranges from about four to eight weeks, although it can extend to two to three months if additional policy actions or internal reviews are needed. This period allows the IMF to finalize detailed documentation, ensure that the borrowing country has completed any necessary prior actions, and schedule the meeting in line with its internal agenda and compliance requirements.

Thus, Pakistan can expect to get the executive board approval for the aforementioned tranches between April-end or mid-May.