ISLAMABAD: The government of Pakistan is contemplating the introduction of a carbon levy in the 2025-2026 fiscal budget, ARY News reported, citing sources.
The proposal is expected to be discussed with the International Monetary Fund (IMF) delegation during their upcoming visit. The IMF team, arriving in Pakistan on February 28, will engage in technical discussions from February 24 to 28 with federal and provincial authorities, focusing on green budgeting, climate spending, and the carbon levy’s implementation.
Additionally, the delegation will present recommendations for expanding green budgeting in the upcoming financial plan. Pakistan is also seeking a concessional loan of $1-1.5 billion, contingent on successful negotiations with the IMF.
Earlier, the IMF confirmed that its delegation would visit Pakistan in mid-March to review the country’s $7 billion loan program. IMF representative Mair Benitez stated that discussions would cover the first review under the loan program, as well as Pakistan’s climate financing request.
A technical team from the IMF will also visit Pakistan at the end of February to evaluate potential climate financing arrangements and discuss related technical matters. In October 2024, Pakistan formally requested $1 billion in IMF funding under a climate trust to address its climate vulnerability.
Pakistan remains one of the most climate-affected nations, as ranked by the Global Climate Risk Index. The devastating 2022 floods, worsened by global warming, impacted 33 million people and caused over 1,700 deaths, exacerbating the country’s financial and debt challenges.
