The IMF Adds a $1.4 Billion Climate Resilience Arrangement to Pakistan's Programme, With Water Pricing and Disaster Finance at the Core
On 9 May 2025 the Executive Board of the International Monetary Fund completed the first review of Pakistan's 37-month Extended Fund Facility and approved a separate arrangement under the Resilience and Sustainability Facility, the IMF's lending window for long-term structural challenges such as climate change. The RSF arrangement gives Pakistan access to about $1.4 billion, equivalent to SDR 1 billion. The completed review released an immediate disbursement of about $1 billion, bringing total disbursements under the Extended Fund Facility, approved on 25 September 2024, to about $2.1 billion.
The 2022 floods, which covered roughly a third of the country at their peak, caused large losses to housing, agriculture, transport and power infrastructure, and pushed millions of people into poverty. Disasters damage public assets, reduce agricultural output and exports, and force unplanned spending on relief and reconstruction, which in turn affects the fiscal position and the balance of payments. The IMF's press release lists five areas that the authorities' RSF programme prioritises: Each area is linked to reform measures that must be completed before tranches are released.
The first review came at a point of improvement in Pakistan's macroeconomic indicators. The IMF also flagged elevated risks from global policy uncertainty, geopolitical tensions and domestic vulnerabilities, and urged the authorities to maintain tight monetary policy and accelerate structural reforms. Pakistan's power system includes significant hydropower from the Tarbela and Mangla dams and newer projects in the north, alongside imported LNG, domestic gas, coal including Thar lignite, nuclear, and a fast-growing base of solar, much of it installed by households and businesses behind the meter. The IMF created the RSF in 2022 and has approved arrangements for a number of countries, including Bangladesh, Jamaica, Rwanda, Costa Rica, Barbados and others.