Pakistan seeks to increase IMF loan to $8bn 

In a strategic move to enhance financial support, Pakistan is in talks to expand its forthcoming International Monetary Fund (IMF) bailout package from an initial $7.5 billion to potentially $8 billion, as reported by The News.

This increase is being considered through the incorporation of Climate Finance within the Extended Fund Facility (EFF) framework.

Sources within the government disclosed that discussions around augmenting the program's size were initiated during the finalization of the previous Standby Arrangement (SBA) in June 2023.

However, the IMF did not approve the request then, citing the short-term nature of the program but left the door open for future considerations.

Mirroring efforts by Bangladesh, Pakistan is exploring avenues to secure a larger share of financial support in its upcoming engagement with the IMF.

Specifically, the country is looking at the Resilience and Sustainability Facility (RSF) offered by the IMF, which aims at providing affordable long-term financing.

This facility is designed for countries committed to reforming policies to mitigate risks related to climate change and pandemic preparedness, contributing to economic resilience and sustainability.

Eligibility for the RSF hinges on the execution of high-quality policy reforms focused on long-term structural challenges, such as climate change, and requires the country to be engaged in an IMF-supported program with upper credit tranche quality policies.

Importantly, the RSF emphasizes sustainable debt levels and the capacity for repayment, with financing terms tailored to the economic standing of the beneficiary countries.

Pakistan has recently embraced the Public Investment Management Assessment (PIMA) framework, which now includes a Climate-PIMA module, aligning with IMF technical guidelines.

The integration of Climate Finance into the EFF could potentially elevate the program's size to $7.5 or $8 billion, subject to Pakistan's quota under Special Drawing Rights (SDRs).