Islamabad: Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) to secure a $1.3 billion loan aimed at enhancing the country’s climate resilience. This agreement also includes the first review of Pakistan’s ongoing 37-month bailout program with the IMF.

This new climate-focused loan, which awaits formal board approval, is part of a 28-month arrangement. Upon approval, it will also unlock an additional $1 billion from the existing $7 billion bailout initiative, bringing the total disbursements to $2 billion.

Pakistan initially requested $1 billion from the IMF’s Resilience and Sustainability Trust in October. This funding is designed for countries that commit to implementing reforms to enhance resilience against climate-related disasters. The loan is structured to be repaid over 30 years, including a 10-year grace period, and is typically offered at more favorable terms than the current extended fund facility.

The IMF noted in its statement that Pakistan has made notable progress in stabilizing its economy and rebuilding confidence despite a challenging global environment over the past year and a half. Economic growth remains moderate, but inflation has decreased to its lowest point since 2015. Additionally, financial conditions have improved, sovereign spreads have narrowed, and external balances have strengthened.

The deal marks a significant step for Pakistan in securing financial support to address climate challenges while continuing efforts to stabilize its economy.