IMF Approves $1.3 Billion Climate Loan for Pakistan, Releases $1 Billion Under Bailout Program
Washington, March 25 – The International Monetary Fund (IMF) has approved a $1.3 billion loan for Pakistan under its Climate Resilience and Sustainability Facility, while also reaching a staff-level agreement on the first review of the country’s $7 billion bailout program, the global lender said on Tuesday.
The new 28-month climate-focused arrangement aims to support Pakistan’s efforts to tackle climate change while committing to economic reforms. Additionally, the IMF’s decision to free up $1 billion under the Extended Fund Facility (EFF) brings the total disbursements to Pakistan under the bailout program to $2 billion.
“The IMF team has reached a staff-level agreement (SLA) with the Pakistani authorities on the first review of the 37-month extended arrangement under the EFF, and on a new 28-month arrangement under the IMF’s Resilience and Sustainability Trust with total access of around $1.3 billion,” Nathan Porter, the IMF mission chief to Pakistan, said in a statement.
“Upon approval (by the IMF board), Pakistan will have access to about $1 billion under the EFF, bringing total disbursements under the program to about $2 billion,” he added.
Pakistan’s economic policies have won praise from the IMF, which acknowledged the country’s efforts in achieving stability despite global economic headwinds. According to state-run Radio Pakistan, the agreements mark a “testament to Pakistan’s significant strides in economic reforms, focusing on tax equity, monetary stability, energy sector transformation, and climate resilience.”
“Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment,” Porter said. He noted that while economic growth remains moderate, inflation has fallen to its lowest level since 2015, financial conditions have improved, sovereign bond spreads have narrowed significantly, and external balances have strengthened.
The IMF’s approval of the fresh loan and the release of a second tranche under the EFF are expected to bolster Pakistan’s economic resilience, address climate change concerns, and support its balance of payments position.
