Pakistan has taken a significant step toward advancing climate financing in South Asia, as banking and government leaders stressed the urgent need for regional collaboration to tackle climate change and strengthen resilience. At a high-level conference organized by the Sustainable Development Policy Institute (SDPI), Pakistan Banking Association (PBA) Chairman Zafar Masood proposed the creation of South Asia’s first dedicated Regional Climate Bank, aimed at funding green projects across the region.
Chairman Masood highlighted that climate change is a shared challenge demanding collective financial mechanisms. He urged that climate financing be elevated to a constitutional priority under the proposed 27th Amendment. Masood pointed out that developing countries still face a shortage of viable, bankable projects capable of attracting climate funds, despite the global focus on green finance. Establishing a regional institution would provide a structured platform for investment, technical guidance, and mobilization of international climate capital.
Finance Minister Muhammad Aurangzeb, addressing the same forum, described climate change and population growth as key survival challenges for Pakistan. He called for practical solutions rather than additional bureaucratic structures, emphasizing the need to implement scalable and innovative climate initiatives. Aurangzeb commended private sector efforts such as Acumen’s $90 million Climate Action Fund and Sindh’s pioneering mangrove carbon credit project, noting that such models should be replicated nationwide to enhance environmental and economic outcomes.
The minister also highlighted Pakistan’s growing potential for debt-for-nature swaps, stressing the importance of enhancing technical capacity to design, structure, and monitor bankable, investable climate projects that meet international standards. “We must ensure that climate initiatives are financially viable, technically robust, and aligned with global best practices,” Aurangzeb said.
Pakistan has already secured strong multilateral support to strengthen climate financing. This includes a 10-year Country Partnership Framework with the World Bank, providing $2 billion annually, a $1.3 billion climate financing arrangement with the International Monetary Fund (IMF), and $500 million from the Asian Development Bank (ADB). The minister reaffirmed Pakistan’s commitment to staying on track with its IMF reform program and announced plans to issue Panda Bonds in the Chinese capital market to diversify funding sources for sustainable projects.
Aurangzeb also noted Pakistan’s regulatory progress in the digital finance sector, with the establishment of the Pakistan Crypto Council and the Virtual Asset Regulatory Authority, and upcoming legislation to regulate digital assets. This framework, he suggested, could complement innovative climate financing solutions, particularly in mobilizing private sector and technology-driven investments.
The call for a dedicated Regional Climate Bank reflects Pakistan’s ambition to lead South Asia in green finance and environmental sustainability. By pooling regional resources, expertise, and international funding, such an institution could address the urgent climate challenges facing the region, accelerate the implementation of green projects, and foster a resilient and low-carbon economic future.
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