Pakistan has reportedly agreed to the International Monetary Fund’s (IMF) demands to update its project selection process and increase the weighting criteria for climate change considerations by August of next year. Furthermore, a carbon fee is anticipated to be announced in the upcoming budget, according to The News.
In a move to comply with the IMF, Pakistan has committed that all new infrastructure projects exceeding a cost of Rs7.5 billion will have their Planning Commission (PC-1) documentation made publicly available on the PC website. Top official sources indicated that the government will also enhance its project appraisals and climate screening assessments to prioritize infrastructure projects with the most significant impact.
Sources further revealed that Pakistan and the global lender have reached an agreement to extend the federal government’s existing budget tagging system to encompass grant and subsidy spending. This same methodology will also be applied to tag spending by provincial governments.
Pakistan has also pledged to the IMF to actively work towards tagging and tracking expenditures that are harmful to the climate and to harmonize its budget tagging system with other established green taxonomies. The government will undertake an update of the project selection criteria for the Public Sector Development Programme (PSDP) with the aim of prioritizing climate-friendly initiatives.
Climate change considerations will now constitute at least 30% of the selection criteria for infrastructure projects. To ensure transparency, a clear scoring system will be developed, complete with explicit protocols for evaluating projects based on these criteria.
The government has committed to publishing the distribution of scores for all new projects by August 2026. Additionally, on an annual basis, Pakistan will report on its project selection process and will publish the scores for each project that receives approval from the Central Development Working Party (CDWP) and the Executive Committee of the National Economic Council (ECNEC).
Looking ahead, Pakistan will also implement comprehensive adaptation and mitigation assessments by the end of August 2027. This will involve all new major infrastructure projects undergoing thorough climate vulnerability, adaptation, and mitigation assessments as a critical prerequisite for their inclusion in the PSDP.
