All uplift projects: IMF urges govt to raise climate change weighting to at least 30pc

ISLAMABAD: The International Monetary Fund (IMF) has urged the government to significantly raise the climate change weighting in its public investment procedures and parameters methodology to at least 30 percent for all infrastructure projects, while also developing clear protocols for scoring proposals and publicly disclosing the selection process and score distribution for new schemes included in the PSDP.

According to the IMF in its second review of the ongoing Extended Fund Facility (EFF) and the first review of the Resilience and Sustainability Fund (RSF) report, a comprehensive system is needed for identifying climate-relevant spending across federal and provincial governments, ensuring detailed budgeting aligned with the National Climate Change Policy, and establishing an ongoing mechanism for monitoring execution against planned climate spending.

It further said in the report that Fiscal Affairs Department of the Fund would consult with the World Bank on the climate finance element of the selection process; and that improved fiscal and external sustainability would result from more efficient and lower expenditure on, and reduced import demand for, climate-related infrastructure and disaster relief.

Projects under PSDP: Ministry tells IMF allocations capped at 2pc

The IMF also asked the government to revise the PSDP call circular so that for all new major infrastructure projects (greater than Rs 7.5 billion), only those that have undergone climate vulnerability, adaptation, and mitigation screening will be included in the budget, and to publish a consolidated report summarizing the screening assessments for these projects.

The report recommended expanding the federal climate budget-tagging framework to include expenditure on grants and subsidies and extending budget tagging to provincial spending. It also advised publishing an annual climate budget statement and quarterly execution reports, tracking climate expenditure across each category and explaining any deviations from targets.

The report emphasized the need to develop and publish on the Ministry of Planning website (i) the criteria for project selection, including a scorecard detailing the weight assigned to each criterion and the methodology for calculating the score, and (ii) the annual limit on the total size of new projects entering the PSDP portfolio.

Supplemental support from the ADB will be provided, along with new budget preparation technical assistance from the World Bank.The report noted that the European Commission is developing new Public Financial Management (PFM) technical assistance support, while the Foreign, Commonwealth & Development Office (FCDO) is coordinating provincial green budget integration.

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