Pakistan to approach IMF seeking financial support under climate change

Pakistan government will formally ask the International Monetary Fund (IMF) to approve loan under the umbrella of climate change to help combat any national calamity and recoup people from 2022 flood.

Country’s Finance Minister Mohmmad Aurangzeb left for Washington Sunday evening to attend annual general meeting of the IMF and World Bank.

According to ministry sources, finance minister will hold meetings with the officials of IMF and World Bank, including the Managing Director of the IMF Christina Herzegovina and probably with the WB president.

Muhammad Aurangzeb will request for financial support under Climate Change. Though the amount of the funding has not been decided but according to the sources, the support might land between $1.5 billion to $2 billion.

In 2022, country experienced devastating floods that caused significant damage. The floods destroyed standing crops, washed away thousands of constructed structures, and resulted in the loss of lives and livestock.

In October 2022, the World Bank reported that total damages from the disaster exceeded $14.9 billion, with economic losses reaching approximately $15.2 billion.

The estimated cost for rehabilitation and reconstruction is at least $16.3 billion. This figure excludes the necessary new investments to support Pakistan’s climate adaptation and overall resilience to future climate shocks.

The sectors most affected were housing ($5.6 billion), agriculture and livestock ($3.7 billion), and transport and communications ($3.3 billion). Sindh province bore the brunt of the impact, accounting for nearly 70% of the total damages and losses, followed by Balochistan, Khyber Pakhtunkhwa, and Punjab.

According to sources, the government had initially planned to seek climate change financial support earlier but decided to wait for the IMF’s approval of a $7 billion loan package, which extends over 37 months.

Of this amount, $1 billion has already been released and added to the State Bank of Pakistan’s foreign exchange reserves. Over the past year, the central bank’s foreign exchange reserves have more than doubled, increasing from $4.4 billion to $10 billion.