Lessons from Pakistan: How are the IMF and the World Bank shaping climate policy?

Summary

Executive Summary:

There is a consensus that the IMF and the World Bank Group (WBG) need reform. The President of Kenya called for a “new financial model where power is not concentrated in the hands of the few” (Nation, 2023). However, current proposals primarily focus on increasing their financial power while neglecting to advance meaningful transformation.

The WBG and the IMF play significant roles in shaping Global South countries’ climate policy. Without substantial changes in governance, accountability, and a thorough review of their toolkits, these institutions risk repeating past failures in promoting development. This report analyses the WBG’s and the IMF’s climate policies and assesses climate-related aspects of both institutions’ recent operations in Pakistan in order to review the compatibility of their operations with meaningful climate action.

Both the WBG’s Evolution Roadmap and Climate Change Action Plan, the IMF’s Climate Change Strategy, and the Resilience and Sustainability Trust (RST) highlight the extent of their ambitions. The emphasis remains on catalysing private finance and addressing short- term fiscal issues and debt sustainability, disregarding the tension of these objectives with long-term strategic investments and climate justice. The proposed scaling up of collaboration between the IMF and the WBG, as outlined in the RST, raises concerns reminiscent of structural adjustment programs from the 1980s and 1990s.

The adverse impacts of WBG and IMF interventions on climate action in Pakistan underscore the need for a comprehensive review of their activities, approaches, procedures, and objectives. Pakistan’s extensive history of 23 IMF programs and over $40 billion in WBG investments across various sectors provides ample opportunity for cross- sectoral assessments of the climate compatibility of International Financial Institutions’ (IFI) operations (Rajvanshi, 2023; WBG, 2023).

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