IMF to visit Pakistan for talks on $1b climate financing

PM Shehbaz Sharif and IMF Managing Director Kristalina Georgieva meet on the sidelines of World Governments Summit in Dubai. PHOTO: NNI
Listen to article
An International Monetary Fund (IMF) mission will arrive in Islamabad next week to discuss around $1 billion in climate financing for Pakistan, an adviser to the Pakistan finance minister said on Thursday.
Advisor to Finance Minister Khurram Schehzad told Reuters that the mission would visit from February 24 to 28 for a 'review and discussion' of climate resilience funding.
The disbursement will take place under the Fund's Resilience and Sustainability Trust, created in 2022 to provide long-term concessional cash for climate-related spending, such as adaptation and transitioning to cleaner energy.
Pakistan made a formal request in October last year for around $1 billion in funding from the IMF under the trust, to address the nation's vulnerability to climate change.
The country's economy is on a long path to recovery after being stabilised under a $7 billion IMF Extended Fund Facility it secured late last year.
Another IMF mission will arrive in Pakistan in the first week of March for a first review of that facility, Schehzad said.
The Global Climate Risk Index places Pakistan among the countries most vulnerable to climate change.
Floods in 2022, which scientists said were aggravated by global warming, affected at least 33 million people and killed more than 1,700. The country's economic struggles and high debt burden impinged its ability to respond to the disaster.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Recorder

5 hours ago

• Business Recorder

National Security Committee to meet today

ISLAMABAD: Prime Minister of Pakistan, Shehbaz Sharif, has convened an important meeting of the National Security Committee (NSC) on Monday (today) at 12 pm at the Prime Minister's House. According to reports, the NSC meeting will be attended by both civil and military leadership including Army Chief, Field Marshal Asim Munir, who is expected to brief participants on his recent visit to the United States. Senior cabinet members including the Defence Minister, Interior Minister, Deputy Prime Minister, and Finance Minister will also be in attendance. In meeting with COAS Munir, Trump lauds Pakistan's ongoing efforts for regional peace, stability The session will include consultations on the ongoing Iran-Israel-US tensions, with major decisions likely regarding Pakistan's support for Iran and other key matters. The internal security and border situation of the country will also be reviewed in detail during the meeting, sources said. Copyright Business Recorder, 2025

Business Recorder

9 hours ago

• Business Recorder

Debt shift, not debt reform

The government has finally laid out the numbers behind what it calls a 'power sector reform milestone.' At the heart of the plan is the promise to clear Rs2.4 trillion in circular debt (CD) stock, a long-standing source of fiscal haemorrhage and economic distortion. One might assume this announcement heralds structural correction, long-term efficiency, and consumer relief. But the details tell a different story. A large part of this so-called reform involves borrowing Rs1.25 trillion from commercial banks to retire existing Power Holding Limited (PHL) loans and clear residual interest-bearing arrears owed to power producers. This new debt is to be repaid over six years through 24 equal quarterly instalments, totalling Rs1.938 trillion. Now here's the kicker: the government claims that this facility is secured at three-month KIBOR minus 0.9 percent, as agreed with the IMF. This rate today equates to roughly 10.1 percent per annum. But the math simply does not add up. A Rs1.275 trillion loan repaid in Rs1.938 trillion over six years implies an effective annual interest rate of around 17.2 percent, assuming standard amortization. That is a full seven percentage points higher than the stated concessional rate. Unless the loan was locked in when KIBOR was at 18 percent - or is structured with heavily back-loaded payments or embedded escalators - there is a clear credibility gap between what is being claimed and what is being paid. The government needs to explain this gap. Was KIBOR frozen at the time of agreement? Are there compounding mechanics hidden under the hood of the Islamic finance structure? Is the 'KIBOR minus 0.9%' a red herring for a far more expensive reality? Worryingly, this is not just about opaque pricing. It is about who foots the bill. Because the loan will be repaid not by the fiscal budget, but by consumers, through the Debt Service Surcharge (DSS) on electricity bills, which have been set at 10 percent of Nepra's determined revenue requirement and now set to become uncapped. If the DSS collection falls short, it will be raised. If projections show a future shortfall, it will be pre-emptively raised. That is not reform. That is shifting the entire burden of past mis governance, theft, non-recovery, and political expediency onto paying consumers. For six straight years. This is not the retirement of circular debt. This is its refinancing and repackaging as consumer debt, backed by law, buried in your electricity bill, and enforced by NEPRA. It solves none of the underlying inefficiencies: transmission losses, governance failures, unchecked subsidies, DISCO mismanagement, which created the CD crisis to begin with. This plan may look clean on government balance sheets and help Pakistan check boxes on the IMF's program matrix. But from the perspective of the average paying consumer — the very same who already bears the weight of capacity charges, taxes, and losses — this is nothing short of an institutionalized penalty. A reform that raises no efficiency, cleans no value chain, and punishes compliance is not is a relabelling exercise: expensive, regressive, and deeply unfair. Copyright Business Recorder, 2025

Business Recorder

9 hours ago

• Business Recorder

NSC to meet today

ISLAMABAD: Prime Minister of Pakistan, Shehbaz Sharif, has convened an important meeting of the National Security Committee (NSC) on Monday (today) at 12 pm at the Prime Minister's House. According to reports, the NSC meeting will be attended by both civil and military leadership including Army Chief, Field Marshal Asim Munir, who is expected to brief participants on his recent visit to the United States. Senior cabinet members including the Defence Minister, Interior Minister, Deputy Prime Minister, and Finance Minister will also be in attendance. In meeting with COAS Munir, Trump lauds Pakistan's ongoing efforts for regional peace, stability The session will include consultations on the ongoing Iran-Israel-US tensions, with major decisions likely regarding Pakistan's support for Iran and other key matters. The internal security and border situation of the country will also be reviewed in detail during the meeting, sources said. Copyright Business Recorder, 2025