Pakistan moves to secure $1 billion ADB climate loan with $500 million immediate disbursement

The Pakistan government has initiated plans to secure a $1 billion loan from the Asian Development Bank (ADB) to strengthen climate disaster preparedness and fiscal resilience, with $500 million expected to be disbursed immediately upon approval, The Express Tribune reported. 

The Central Development Working Party (CDWP), chaired by Planning Minister Ahsan Iqbal, granted concept clearance for the financing under the Climate Disaster Resilience Enhancement Programme, paving the way for consideration by the ADB board.

Officials said the remaining $500 million will be available as contingent disaster financing over five years to provide support in the event of natural disasters. The initial tranche is expected before June to help manage pressure on foreign exchange reserves amid upcoming external debt repayments.

The programme focuses on policy reforms and institutional capacity building, including implementation of the National Disaster Management Plan III, operationalisation of the National Emergency Operations Centre, and development of risk-based flood management systems.

As part of the initiative, Pakistan has committed to establishing a disaster risk financing framework with a target of mobilising Rs200 billion to ensure timely response to climate shocks.

The contingent financing component is expected to provide social protection to around nine million vulnerable households during disaster events. The loan will carry a tenure of 15 years, including a three-year grace period, with pricing based on ADB’s flexible lending terms and a commitment charge on undisbursed funds.

Officials noted that Pakistan remains highly exposed to climate risks such as floods and droughts, with annual financing requirements estimated between $30 billion and $60 billion to address climate-related losses and adaptation needs.