Pakistan has moved forward with plans to secure a $1 billion budget support loan from the Asian Development Bank to strengthen its capacity to respond to climate-related disasters and improve resilience against extreme weather events.
The concept proposal for the second tranche of the Climate Disaster Resilience Enhancement Programme has been cleared by the Central Development Working Party, chaired by Ahsan Iqbal. The approval paves the way for consideration by the ADB’s board.
Under the proposed financing plan, $500 million is expected to be released immediately after board approval, while the remaining $500 million will remain available over the next five years as contingency financing that can be accessed in the event of future natural disasters.
Officials said the first tranche is expected before June and could help ease pressure on Pakistan’s foreign exchange reserves as the country faces external debt repayments of $4.8 billion this month. The financing comes at a time when Pakistan continues to face high exposure to floods, droughts, and other climate-related shocks, with annual climate financing requirements estimated between $30 billion and $60 billion.
Unlike traditional development loans, the programme is linked to policy reforms rather than project-based spending. The funding is intended to support improvements in disaster risk governance, flood management systems, institutional coordination, and implementation of national disaster response frameworks. The government has also committed to mobilizing Rs. 200 billion under a disaster risk financing framework to ensure faster and more effective responses to future emergencies.
Separately, the government deferred approval of a $40 million project proposed with support from the World Bank after concerns were raised over the planned use of external borrowing for non-essential expenditures.
Officials flagged procurement plans that included laptops priced at $3,000 each, office furniture, software systems, and consultancy services, which together accounted for nearly three-quarters of the total project cost.
Following the objections, 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 committee will assess whether the proposed expenditures, including salaries of up to Rs. 875,000 per month and costly office equipment, are justified under a project financed through foreign loans.
