ISLAMABAD:Pakistan is actively engaged with the International Monetary Fund (IMF) to secure climate funding, with expectations of receiving $1-1.5 billion in support, Federal Finance Minister Muhammad Aurangzeb stated while speaking to the media on Thursday.
During an informal discussion with reporters after a ceremony in Islamabad, Aurangzeb announced that an IMF mission would visit Pakistan on February 24 to deliberate on the Climate Fund. Additionally, another mission is scheduled to visit next month for the biannual review of the ongoing Extended Fund Facility.
“We will hold discussions with the IMF regarding the climate fund. The mission is expected to offer between $1-1.5 billion in climate financing,” the minister said. “A second IMF delegation will visit in March for a six-month review of the economic program,” he added.
The IMF provides climate funding through its Resilience and Sustainability Trust, established in 2022 to offer long-term concessional financing for climate-related projects, such as clean energy transitions and climate adaptation efforts.
Pakistan formally requested around $1 billion under this program in October last year to address its climate vulnerabilities. According to official statements, the IMF mission will be in Pakistan from February 24 to 28 for discussions and a review of climate resilience financing.
Aurangzeb expressed confidence in the IMF program’s progress. “Everything related to the IMF program is on track,” he emphasized. He noted that while the current account deficit for one month turned negative, it remained positive over a seven-month period.
“Structural reforms are necessary to permanently stabilize the economy. Without them, sustainable economic improvement is not possible,” he cautioned. He also highlighted the need for controlled economic growth to prevent repeated cycles of economic instability.
At the ‘Retail Reimagined: Innovate, Collaborate, and Thrive’ conference, organized by the Pakistan Retail Business Council (PRBC), Aurangzeb addressed concerns about the retail sector’s tax contributions.
“Despite contributing 19% to GDP, the retail sector accounts for only 1% of tax revenue,” he said. The government, he added, has been working with retailers to formalize their businesses and ensure fair tax contributions.
He pointed out that an unfair tax burden on the manufacturing, services, and salaried sectors is not sustainable. “We must bring more sectors into the tax net. The country can no longer afford people avoiding taxes,” he asserted.
Aurangzeb highlighted ongoing tax system reforms, including digitization to enhance transparency, reduce revenue leakages, and combat corruption. “With the implementation of faceless customs, the culture of under-the-table dealings has diminished, making the tax system more efficient,” he explained.
He also emphasized the need to bring Rs9.4 trillion in cash circulation into the formal economy. While acknowledging that this transition cannot happen overnight, he reaffirmed the government’s commitment to economic formalization.
In his address, the minister noted that Pakistanβs economic outlook had improved significantly, citing macroeconomic stability, currency stabilization, increased foreign exchange reserves, and declining inflation. The policy rate has also seen a notable reduction, with Kibor falling from 23% to 11%.
“These improvements have attracted foreign investors back to Pakistan. Institutional investments are flowing into both the debt and equity markets,” Aurangzeb stated.
