Pakistan's first bailout package tranche released, IMF approves a loan to tackle climate change

The International Monetary Fund has agreed to a loan of $1.3 billion for Pakistan to fight climate change. Along with this, a staff-level agreement has also been reached on the first review of the $7 billion loan that has already been approved. Climate resilience has been made a priority in the new agreement. The agreement will be for a period of more than 28 months. The aim is to help deal with climate-related issues while expressing commitment to reforms. Furthermore, the release of $1 billion for the country under the $7 billion bailout package will now take the total disbursement to $2 billion.

"The IMF team has reached a staff-level agreement (SLA) with Pakistani authorities on the first review of the 37-month extended arrangement under the Extended Fund Facility (EFF), with a total of approximately $1.3 billion to be disbursed over a period of 28 months under the IMF (Resilience and Stability Trust)," IMF mission chief in Pakistan Nathan Porter said on Tuesday.

According to Radio Pakistan, these two agreements providing access to nearly $2 billion are "evidence of Pakistan's significant progress in economic reforms, focusing on tax parity, monetary stability, energy sector transformation, and climate resilience." The IMF also praised Pakistan for its efforts to bring stability in its statement.

In a statement issued by the fund, Porter said, "Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and confidence despite a challenging global environment." He said although economic growth remains moderate, inflation has fallen to its lowest level since 2015, the financial situation has improved. The approval of the new loan and the release of the second tranche under the EFF will help Pakistan deal with climate change and balance of payments issues.