ISLAMABAD (PEN) : Pakistan is weighing the introduction of a carbon levy in its upcoming budget for the fiscal year 2025-2026, according to sources reported by ARY News.
The proposal is expected to be a key topic of discussion during an upcoming visit by an International Monetary Fund (IMF) delegation, scheduled to arrive on February 28. Over the course of technical talks between February 24 and 28, the IMF team will engage with federal and provincial authorities to focus on issues like green budgeting, climate spending, and the potential implementation of a carbon tax.
In addition to the carbon levy, the IMF delegation is expected to present recommendations on expanding green budgeting in the next fiscal plan. Pakistan is also looking to secure a concessional loan ranging from $1 billion to $1.5 billion, with the details to be finalized based on ongoing negotiations with the IMF.
Earlier, the IMF confirmed that its delegation will return to Pakistan in mid-March to conduct a review of the country’s $7 billion loan program. The review will not only cover the economic progress under the program but will also delve into Pakistan’s request for climate-related financial support. To that end, a separate IMF technical team will visit at the end of February to focus on climate financing, evaluating potential arrangements and technical matters.
Pakistan had formally requested approximately $1 billion in funding under the IMF’s climate trust fund in October last year. This funding is seen as crucial for addressing the country’s vulnerability to climate change, as it faces mounting environmental challenges. As one of the nations most at risk of climate change, Pakistan has already felt the devastating effects, notably through the floods of 2022, which affected 33 million people and caused over 1,700 deaths. The financial strain and heavy debt burden have made it more difficult for the country to adequately respond to such disasters.
With the IMF’s assistance, Pakistan hopes to chart a path toward stabilizing its economy and bolstering efforts to combat climate change and the risks it poses to its citizens.
