As Pakistan seeks ongoing international support at the global climate conference (COP28) in Dubai, the International Monetary Fund (IMF) has advised the government to make the budget for FY2024-25 a turning point for planning and investment portfolios focused on climate adaptation.
The IMF also emphasized the need for transparency on climate-related actions with budgetary implications to facilitate policymaking and climate financing.
The IMF recommended improving transparency in budget documentation by presenting key information on the Public Sector Development Programme (PSDP) and the broader public investment program. It also urged the Planning Commission to collaborate with the Finance Division on a proposal for approval by the Executive Committee of the National Economic Council (Ecnec) to be included in the 2024-25 budget documentation.
Furthermore, the IMF called for the advancement of green budgeting, including budget tracking and the publication of information on climate-related costs.
Additionally, the IMF suggested that the Ministry of Finance build on the current tracking exercise and provide guidance to line ministries in budget call circulars for FY24-25. It also recommended extending the green tracking system to all provinces with the support of the controller general of accounts.
The IMF advised the economic adviser wing of the finance ministry to prepare and publish long-term fiscal sustainability analysis in the statement of fiscal risks under different climate change scenarios. The fund emphasized the need to assess and publish information on discrete fiscal risks arising under these scenarios.
As part of ongoing efforts, the IMF called for strengthening the appraisal process for investment and projects, including the consideration of climate factors. It set deadlines for applying comprehensive selection criteria to guide the allocation of development budget funding, prioritizing allocative efficiency improvement, and adapting the entire budget formulation and approval process to climate change requirements.
The IMF acknowledged capacity constraints as a significant challenge to implementing Pakistan’s climate change agenda and recommended immediate efforts to train staff and strengthen the capacity of relevant government bodies.
It emphasized the importance of overseeing and coordinating investment projects targeting the achievement of the National Climate Change Policy and National Determined Contributions goals.
The recommendations come as Pakistan aims to garner international support and attract climate-related financing at COP28 in Dubai.
