Islamabad
The International Monetary Fund (IMF) on Thursday, has urged Pakistan to invest approximately Rs 1.24 trillion annually, or 1% of its GDP, in climate resilience initiatives. This investment is deemed necessary to prepare for recurring extreme weather events, particularly floods, which have severely impacted the nation.
In a policy advisory, the IMF emphasized that proactive spending on climate-adaptive infrastructure could significantly mitigate the negative economic impacts of natural disasters. The organization noted that such investments could reduce the adverse growth effects of disasters by one-third, allowing for a quicker recovery.
The IMF stated that enhancing public investment efficiency is crucial and suggested following the Climate-Public Investment Management Assessment (C-PIMA) Action Plan. This plan has already led the Pakistani government to request up to USD 2 billion in additional funding from the IMF for climate resilience efforts.
While the required investment could lead to moderately higher debt levels, the IMF highlighted that fiscal consolidation and structural reforms are vital for maintaining financial stability in the face of natural disasters. Pakistan has faced persistent challenges, including stagnating incomes and high poverty rates, which have worsened its vulnerability to climate change.
Between 1992 and 2021, climate-related disasters resulted in economic losses of USD 29.3 billion, equivalent to 11.1% of the country’s GDP. The catastrophic floods in 2022 alone caused significant loss of life and displacement, along with considerable economic damage. The IMF stresses that comprehensive reforms combined with climate adaptation investments are essential for Pakistan to develop a sustainable economic model and enhance its resilience against future shocks.
