ADB approves $500m loan to support climate and disaster resilience in Pakistan

The Asian Development Bank (ADB) has approved a $500 million policy-based loan to support climate change and disaster risk reduction and resilience in Pakistan, a statement from the bank said on Tuesday.
In 2022, massive floods triggered by climate change devastated several parts of Pakistan, killing 1,700 people, washing away swathes of agricultural land, affecting 33 million people, and incurring losses worth $30 billion, according to government estimates.
The Climate and Disaster Resilience Enhancement Programme (CDREP) will strengthen Pakistan’s institutional capacity for planning, preparedness, and response; increase inclusive investment in disaster risk reduction and climate resilience; and support the scale-up of disaster risk financing using a risk-layered approach, the statement said.
“Pakistan is one of the most vulnerable countries to climate change and disasters triggered by natural hazards in Asia and the Pacific. Average losses from disaster events exceed $2 billion per year.
“Women and other vulnerable groups are disproportionately affected by climate change and disaster events,” the statement said.
“This programme builds on ADB’s longstanding work in Pakistan to understand and reduce climate and disaster risks and support effective disaster response,” said ADB Director General for Central and West Asia Yevgeniy Zhukov.
“We are proud to support an integrated and comprehensive approach to climate and disaster risk management, including a portfolio of disaster risk financing instruments for timely and adequate funding for disaster response,” Zhukov was quoted as saying in the statement.
It added that the programme supports the enhanced capacity for disaster risk mapping and modelling for investment and development decisions, as well as enhances coordination for disaster monitoring and response. It also supports enhanced planning and prioritisation of gender-sensitive and resilient public investments, including integrated flood risk management and nature-based solutions.
The programme supports the mobilisation of climate finance from public and private sources. This includes the issuance of a domestic green sukuk (Islamic bond).
A key innovation of the program is the use of ADB’s Contingent Disaster Financing option for the first time in the Central and West Asia region. This will provide quick disbursing budget support in the event of a disaster.
The programme will also support the establishment of a solidarity fund to facilitate the uptake of risk transfer solutions such as agriculture insurance, while also backing shock-responsive social protection to deliver cash assistance in the event of a disaster, the statement added.
ADB has also approved a technical assistance grant of $1 million to support the implementation of the programme.
Tuesday’s announcement comes after the ADB announced in September that it will provide $2 billion in annual assistance to Pakistan over the next three years to support infrastructure development and climate-resilient initiatives.
A report by the Policy and Strategy Committee (PSC) and the Oversight Board on Post-Flood Reconstruction Activities showed last month that the country had only received $10.9bn from international development partners out of the total estimated loss for post-flood reconstruction work, leaving a $19.1bn shortfall that has halted the rehabilitation of flood-affected communities in three provinces.
ADB’s country partnership strategy, 2021–2025, for Pakistan, focuses on three priorities: improving economic management, building resilience, and boosting competitiveness and private sector development.
As of December 31, 2023, the bank has committed 755 public sector loans, grants, and technical assistance totalling $41.4bn to Pakistan. ADB’s current sovereign portfolio in Pakistan includes 55 loans and four grants worth $10.11bn.
Cumulative sovereign and nonsovereign loan and grant disbursements to Pakistan amount to $31.76bn.
These loans were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.