Two IMF missions due for talks on climate finance, EFF review

ISLAMABAD: The International Monetary Fund (IMF) confirmed on Friday that two of its missions will visit Pakistan in the next two weeks; the first mission will focus on discussions regarding climate finance, while the second will carry out the first review of Pakistan’s progress under the $7 billion Extended Fund Facility (EFF).

“An IMF staff team is scheduled to visit Pakistan in early-to-mid March for discussions around the first review under Pakistan’s Extended Fund Facility-supported programme, and the authorities’ request for assistance under a Resilience and Sustainability Facility (RSF) arrangement.

“In this regard, a technical team will be in Pakistan starting in late February to discuss technical issues related to a possible RSF arrangement,” the IMF’s resident chief in Pakistan Mahir Binici stated in a brief statement on Friday.

However, official sources told The News in background discussions that first of all a technical team of the IMF would arrive Islamabad on coming Monday (Feb 24) for holding talks under Resilience and Sustainability Facility (RSF) under which Pakistan had made a request for $1 to $1.5 billion funding to augment the existing loan of $7 billion under EFF up to $8 or $8.5 billion. The findings of this technical mission will then firm up on the occasion of the first review under the EFF arrangement as the IMF review mission is scheduled to visit Islamabad by early next month probably from March 4, 2025 for discussing various sectors of the economy for almost 10 to 12 days period after which the Fund staff would take at least four to six weeks period for presenting its report before the IMF’s executive board, provided both sides struck a staff-level agreement in the upcoming review talks. In case of smooth sailing in both technical and review mission, Pakistan would be able to secure $2 to $2.5 billion through release of second instalment of $1 billion and augmenting of EFF through RSF loan facility of $1 to $1.5 billion.

In order to qualify for RSF, Pakistan has prepared a Public Investment Procedures and Parameters report under the IMF conditions and its major contours will be discussed during the upcoming parleys with the technical team of the IMF next week. The federal government has also agreed with the IMF that no provincial nature project will be financed from the federal development allocation in the PSDP.

This report incorporated 10 factors on the basis of which the next Public Sector Development Program (PSDP) schemes is going to be selected including (i) Strategic and core ongoing projects, (ii) Projects with 80pc plus expenditure with realistic completion estimate, (iii) Exceptional and high scoring infrastructure projects (iv) Pre-scrutinized DDWP approved projects against given criteria, (v) Foreign funded projects with adequate rupee cover allocation within IBC, (vi) Provincial nature projects in 20 least developed districts, (vii) Projects in newly-merged districts (NMDs) and other areas to ensure equitable regional development, (viii) PPP projects, where PSDP funding is either used as equity or as viability gap, (ix) Climate responsive and resilient projects, (x) Ready for investment projects. It has also been decided with assent of National Economic Council (NEC) that only 10 per cent new projects will be included into PSDP list from the next budget for 2025-26.

Talking to this scribe, Minister for Planning Ahsan Iqbal said that the share of provincial nature projects in the PSDP went up from 14pc in 2018 to over 42pc till 2022, leaving no fiscal space for undertaking important national level development projects through the PSDP. He alleged that the development framework was destroyed during the PTI-led regime and now the government was binding itself to include only 10pc new projects into the PSDP list. All resources will be diverted towards completion of ongoing projects, he said and added that the throw-forward would be slashed down in coming years.