Pakistan has moved forward with plans to secure a $1 billion budget support loan from the Asian Development Bank to strengthen its ability to respond to climate disasters.
The concept proposal for the second tranche of the Climate Disaster Resilience Enhancement Programme received clearance from the Central Development Working Party, chaired by Ahsan Iqbal.
The approval now clears the way for consideration by the ADB board. Of the total amount, $500 million is expected to be released immediately after approval, while the remaining $500 million will remain available over five years as contingency financing linked to future natural disasters.
Officials said the first tranche is expected before June and may also help cushion pressure on Pakistan’s foreign exchange reserves as the country faces loan repayments of $4.8 billion this month. The support comes at a time when Pakistan continues to face high vulnerability to floods, droughts, and extreme weather, with annual climate-related financing needs estimated between $30 billion and $60 billion.
The financing package is tied to policy reforms rather than direct development spending. It will support stronger disaster risk governance, flood management systems, institutional coordination, and the implementation of national disaster response frameworks.
The government has also committed to mobilizing Rs. 200 billion under a disaster risk financing framework to ensure timely response during future emergencies.
Separately, the government deferred approval of a World Bank-funded $40 million Public Resource Mobilisation project after serious objections were raised over the proposed use of foreign loan money for non-essential purchases.
Concerns centered on expensive procurement plans that included laptops priced at $3,000 each, office furniture, software systems, and consultancy services that together made up nearly three-quarters of the total project cost.
The planning minister ordered a fresh review of the proposal and formed a scrutiny committee led by the vice chancellor of the Pakistan Institute of Development Economics. The review will examine whether the proposed spending, including salaries reaching Rs. 875,000 per month and costly office equipment, is justified for a project financed through external borrowing.
