At last week’s International Monetary Fund (IMF) Annual Meetings, Pakistan’s finance minister Muhammad Aurangzeb requested $1bn in funding from the IMF’s Resilience and Sustainability Trust (RST) to help mitigate the country’s climate risks and accelerate its energy transition.

Established in 2022, the RST offers vulnerable low- and middle-income countries long-term concessional cash for climate-related spending.

IMF Funding Request

Pakistan’s finance minister, Muhammad Aurangzeb, has requested $1 billion from the IMF’s Resilience and Sustainability Trust to address climate risks and accelerate the country’s energy transition.

Circular Debt Crisis

The power sector’s circular debt has surged to Rs2.66 trillion ($9.5 billion), primarily due to inefficiencies in the power distribution network and unfavorable contracts with independent power producers (IPPs).

Reform Plans

The government aims to reform the power sector by optimizing IPP costs, evaluating fiscal burdens on consumers, and unbundling electricity to foster a competitive market, enhancing efficiency and lowering prices.

Role of Renewables

Emphasising the importance of renewable energy, the minister highlighted its potential to provide cheaper electricity, critical for the success of a competitive market regime.

Privatization and Governance

The government plans to privatize electricity distribution companies and improve governance to enhance operational efficiency and ensure more affordable prices for consumers.