Pakistan’s attempt to secure $1 billion in climate financing from the International Monetary Fund (IMF) is a stark reminder of the country’s reliance on external support despite claims of moving toward self-sufficiency.
Since coming into power last year, Prime Minister Shehbaz Sharif has repeatedly vowed to “break the begging bowl.” The rhetoric falls flat, however, as the country struggles to overcome a cyclical reliance on external dependence, most evident in the ongoing $7 billion Extended Fund Facility with the IMF.
Pakistan’s engagement with the IMF is no mere stopgap measure; it indicates systemic vulnerabilities and an inability to enact policies that generate sustainable, homegrown growth. Each of the 24 loans secured by Pakistan from the IMF have come with increasingly harsher conditions. The required austerity measures restrict fiscal flexibility and heighten public disillusionment, papering over structural flaws that have persisted through successive governments for decades.
Admittedly, the aspired climate financing is less restrictive than previous bailouts, repayable over 30 years, including a 10-year grace period. It must, however, still be repaid in full with interest, despite the disproportionate impact of climate change on Pakistan in light of its minor contributions to global greenhouse gas emissions. What it ultimately signifies is a failure of developed nations who have ravaged the environment to pay their fair share to countries they have victimized. For Pakistan, specifically, this amounts to saddling the country with an unsustainable debt burden.
What the country needs now is strategic recalibration. Rather than seeking loans that merely shift the fiscal burden to future governments, policymakers must expand efforts to secure genuine, grant-based climate financing, such as through the COP climate conferences. Such platforms can not only provide financial relief, but also encourage sustainable, homegrown projects that address both environmental challenges and economic constraints.
The government’s recently unveiled homegrown Uraan Pakistan initiative, emphasizing climate resilience, is a step in the right direction. Only by embracing innovative, indigenous solutions and leveraging international platforms for grant-based support can the country break the shackles of unsustainable debt. The country’s future generations deserve no less.