Pakistan has agreed to implement certain conditions set by the International Monetary Fund (IMF) in its latest budget to address climate change concerns. The country has accepted the IMF’s demands to update its project selection and increase the weighting of climate change considerations in infrastructure projects by August 2026. The move is part of Pakistan’s efforts to address the IMF’s concerns over the country’s lack of transparency in infrastructure project approvals and the failure to incorporate climate change considerations into its project selection criteria. The government has agreed to publish the Planning Commission (PC-1) forms of all new infrastructure projects costing over Rs7.5 billion on the PC website. This will help improve the transparency and accountability of the project selection process and ensure that climate change considerations are taken into account when evaluating infrastructure projects. The government has also agreed to improve project appraisals and climate screening assessments to prioritise the most impactful infrastructure. Pakistan and the IMF have also agreed to expand the federal government’s budget tagging system to incorporate spending on grants and subsidies. This will allow for a more accurate tracking of public expenditure and ensure that climate-harmful spending is identified and addressed. The government has also committed to the IMF to work towards tagging and tracking of climate-harmful expenditure and harmonising budget tagging with other green taxonomies. This will help to ensure that climate change considerations are incorporated into the budgeting process and that public expenditure is aligned with sustainable development goals. In addition, the government will update the project selection criteria for the Public Sector Development Programme (PSDP) to prioritise climate-friendly projects. Climate change considerations will account for at least 30pc of the selection criteria for infrastructure projects. A transparent scoring system will be developed with explicit protocols for evaluating projects. The government will also publish the distribution of scores for new projects by August 2026. Additionally, Pakistan will report on the selection process and publish scores for each project approved by the Central Development Working Party (CDWP) and the Executive Committee for National Economic Coordination (ECNEC) annually. Pakistan will also implement adaptation and mitigation assessment till the end of August 2027. All new major infrastructure projects will undertake climate vulnerability, adaptation, and mitigation assessments as a critical requirement for inclusion in PSDP.

“We are committed to addressing the concerns of the IMF and implementing the agreed-upon conditions to ensure that our infrastructure projects are sustainable and environmentally friendly,” said an official.

Key Highlights

• Pakistan will publish the Planning Commission (PC-1) forms of all new infrastructure projects costing over Rs7.5 billion on the PC website.
• Climate change considerations will account for at least 30pc of the selection criteria for infrastructure projects.
• The government will update the project selection criteria for the Public Sector Development Programme (PSDP) to prioritise climate-friendly projects.
• Pakistan will report on the selection process and publish scores for each project approved by CDWP and ECNEC annually.
• The government will implement adaptation and mitigation assessment till the end of August 2027.

Impact on Infrastructure Projects

The implementation of the IMF conditions will have a significant impact on infrastructure projects in Pakistan. The government’s commitment to prioritise climate-friendly projects will help to reduce the environmental impact of infrastructure development. The transparency and accountability measures implemented by the government will also help to ensure that infrastructure projects are properly evaluated and approved. This will help to prevent projects that are not environmentally friendly or sustainable from being approved. Furthermore, the implementation of the climate vulnerability, adaptation, and mitigation assessments will help to identify and address potential environmental risks associated with infrastructure projects.

Benefits and Challenges

The implementation of the IMF conditions will have both benefits and challenges for Pakistan’s infrastructure sector. Benefits:
* Improved transparency and accountability in infrastructure project approvals
* Prioritisation of climate-friendly projects, which will help to reduce the environmental impact of infrastructure development
* Increased reporting and scoring system for infrastructure projects
Challenges:
* Increased administrative burden on the government and stakeholders
* Potential for delays in infrastructure project approvals due to increased evaluation and assessment requirements
* Need for additional resources and funding to support the implementation of climate change considerations

Conclusion

Pakistan’s decision to implement the IMF conditions on climate change and project selection is a significant step towards addressing the country’s environmental and sustainability challenges. The implementation of the conditions will help to improve transparency and accountability in infrastructure project approvals and ensure that climate change considerations are taken into account when evaluating infrastructure projects. While there are challenges associated with the implementation of the conditions, the benefits of improved transparency, prioritisation of climate-friendly projects, and increased reporting and scoring system are likely to outweigh these challenges.