Pakistan’s Minister for Finance Mohammad Aurangzeb held a meeting with the Managing Director IMF, Ms. Kristalina Georgieva, in Washington, D.C, on the sidelines of the ongoing annual spring meetings of the Bretton Woods Institutions (BWIs) known as the IMF and World Bank.
On the sidelines, Pakistan’s delegations led by the Minister for Finance are scheduled to hold meetings with different counterparts belonging to China, Saudi Arabia, Turkey, the UK, and others. He is also expected to hold meetings with the US Treasury Department.
Pakistan is expecting approval of the first review and release of second tranche of $1 billion under $7 billion Extended Fund Facility (EFF) subject to approval of the Fund’s Executive Board by May 2025 along with consideration for approval of another $1.3 billion under 28 months Resilience Sustainability Fund (RSF) for climate finance. This $1.3 billion for RSF will not be disbursed in one go but it will be provided to Pakistan along with the bi-annual reviews under the EFF arrangement over remaining period of 28 months.
Pakistan and the IMF had struck a staff-level agreement for both the EFF and RSF arrangements. The government made a commitment with the IMF to rationalize the Public Sector Development Program (PSDP), standing with throw forward in range of Rs 12 to Rs 14 trillion for completion of all 1071 development schemes.
Under the RSF arrangement, Pakistan accepted the IMF condition expanding the federal government’s budget tagging system to incorporate spending on grants and subsidies, and will extend the same methodology to tagging of spending by the provincial governments, said the official.
It is also a commitment to the IMF that Pakistan will work towards tagging and tracking of climate-harmful expenditure and towards harmonizing budget tagging with other green taxonomies in use in Pakistan.
Pakistan will update the draft project selection criteria and increase the climate change weighting in the PSDP selection process for investment in Infrastructure sectors of at least 30 percent, provide explicit protocols for scoring projects against criteria, and publish the distribution of scores for new projects entering the PSDP.
Pakistan will implementan adaptation and mitigation assessment. Pakistan will screen all major new infrastructure projects and ensure that only projects that have undertaken climate vulnerability, adaptation, and mitigation assessments will be included in the PSDP, and we will publish a consolidated report summarizing the screening assessments for these projects.
To extend all-out support for more climate-sensitive public spending, Pakistan will extend the scope of climate tagging and budget reporting. It had introduced and expanded green budgeting initiatives recently, including reflecting priorities of the National Climate Change Policy in the Budget Call Circular, climate tagging certain components of the federal budget, and producing a summary climate budget.
Building on this foundation, we will publish a climate budget statement in the annual budget statement disaggregated to the level of detail in the sub-classification of expenditure in the Budget Call Circular. Pakistan will establish a new quarterly climate budget execution report that will provide consolidated details of actual expenditure against the sub-classification of climate change, compare budgeted expenditure to outturns, and explain any variances in execution.
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