Pakistan has launched Climate Risk Fund-I (CRF-I) to support vulnerable farming communities and microfinance institutions (MFIs) against climate-related shocks, particularly floods, the State Bank of Pakistan (SBP) announced.
The initiative is part of the World Bank–funded Resilience and Adaptation Mainstreaming (RAM) Project.
In March 2025, the World Bank approved $102 million in financing for Pakistan under the RAM Project, aimed at improving access to microcredit and building the resilience of microfinance providers and their clients in the face of climate risks. Pakistan is among the world’s most climate-vulnerable countries, having suffered repeated disasters in recent years, including the 2022 floods.
The agriculture sector, particularly small, subsistence, and landless farmers served by microfinance institutions, is highly exposed to climate shocks. Rising risks of loan defaults and liquidity shortages have affected microfinance growth, prompting the government to establish CRF-I to safeguard both farmers and financial institutions.
The fund will be managed by SBP under a government-created trust and will provide financing to eligible microfinance providers through two facilities: the Innovative Agriculture Liquidity (IAL) Facility and the Contingent Liquidity Facility (CLF).
The IAL Facility will support pilot agriculture loans bundled with agri-tech services, enabling farmers to adopt climate-resilient crops and techniques that improve productivity and reduce vulnerability to climate shocks.
The CLF will provide liquidity to MFIs after flooding events, allowing them to restructure existing loans or provide new credit to affected borrowers. This ensures that farmers can continue income-generating activities post-flood, while MFIs maintain operational continuity and asset quality.
SBP has issued detailed rules for CRF-I, along with a Policy and Procedures for Environmental and Social Management Systems (ESMS). Microfinance providers can submit applications for allocation under CRF-I to the Secretariat of CRF-I, Programs Management Division (PMD), and the Agricultural Credit & Financial Inclusion Department at SBP by September 30, 2025.
