ISLAMABAD: Pakistan’s Federal Minister for Finance, Muhammad Aurangzeb, made a compelling call on Thursday for urgent economic reforms, stating that the country has “lost its credibility” and that swift action is needed to restore trust in its financial systems. Speaking during a meeting of the Senate Standing Committee on Climate Change, chaired by Senator Sherry Rehman, Aurangzeb highlighted the severe challenges facing Pakistan, particularly in the context of climate financing and negotiations with international lenders.
Aurangzeb’s remarks come at a time when Pakistan is grappling with mounting economic difficulties, as well as the need to address climate change and secure international funding. He mentioned that a team from the International Monetary Fund (IMF) is scheduled to visit Pakistan next week, from February 24 to 28, to continue discussions regarding a $1 billion climate resilience fund for the country. The IMF’s involvement is a critical step in Pakistan’s efforts to secure much-needed resources for sustainable growth.
According to the finance minister, the Asian Development Bank (ADB) has already committed $500 million towards climate resilience, while the government is hopeful that the IMF will contribute an additional $1 billion. He noted that the primary focus of the upcoming discussions would be to finalize the structure of this amount, with the aim of securing a formal agreement soon. “In my opinion, the amount should be at least $1 billion,” he said, underlining the urgency of securing significant funding for climate adaptation and resilience.
Amid ongoing efforts to stabilize the economy, the government is also working on issuing Green Panda Bonds, a move aimed at attracting further investment into green projects and sustainability initiatives. In a significant policy shift, Aurangzeb also announced that the Ministry of Finance would take over the oversight of tax policy, while the Federal Board of Revenue (FBR) would focus solely on tax collection. This restructuring is part of a broader effort to streamline Pakistan’s financial systems and enhance economic performance.
Senator Sherry Rehman, who also spoke at the meeting, underscored the need for structured financial solutions to address Pakistan’s climate financing challenges. She pointed out the country’s estimated $340 billion funding gap for sustainability efforts and emphasized that Pakistan’s financial capacity remains significantly lower than that of neighboring Bangladesh. “Climate finance is not just about pledges; it’s about ensuring timely access to funds and building institutional capacity for climate resilience,” Rehman stated.
Aurangzeb echoed this sentiment, acknowledging that while green technology is vital for sustainability, Pakistan’s existing financing structures are inadequate. He stressed the importance of incorporating the National Adaptation Plan and National Climate Finance strategy into the country’s climate financing approach to ensure effective and efficient resource mobilization. Furthermore, he highlighted the need for clearer definitions and monitoring parameters for green technologies to improve transparency and accountability in the sector.
Both Aurangzeb and Rehman agreed that bureaucratic hurdles remain a significant obstacle to accessing climate funds. The finance minister noted that these inefficiencies must be addressed in order to optimize existing resources and strengthen partnerships with organizations like the United Nations Development Programme (UNDP). They also agreed on the importance of creatively programming climate financing to ensure that resources are mobilized effectively for large-scale projects.
One of the major topics of discussion was Pakistan’s Electric Vehicle (EV) Policy. Senator Rehman emphasized the need for strong incentives to encourage the adoption of EVs, which could significantly reduce carbon emissions and address urban pollution, particularly in Punjab. She stressed that the policy must be implemented effectively, not just remain on paper. Aurangzeb supported this view, stating that aligning EV initiatives with broader economic goals is essential, and he announced the establishment of an advisory board to oversee the policy’s implementation.
Rehman further called for urgent policy reforms to address limitations in carbon sinks and forestry projects, noting that these initiatives have reached their maximum capacity. She advocated for a policy shift to allow Sindh to utilize the entire delta for mangrove restoration without bureaucratic constraints, and emphasized the need for innovative financing solutions to supplement private funding.
The discussion also turned to waste management, with Rehman highlighting biogas and other waste management models as potential areas for investment. She pointed out that bureaucratic inefficiencies continue to hinder progress in these sectors, and that institutional capacity gaps prevent effective use of vertical funds. Without improved financial management, Pakistan will struggle to secure the $50 billion annually needed to tackle its climate challenges.
The session concluded with a commitment from both the finance minister and Senator Rehman to engage provincial governments more actively in climate action efforts. They stressed the importance of a cohesive, national approach to tackling the country’s environmental challenges, ensuring that all provinces contribute to the fight against climate change.
In summary, Finance Minister Aurangzeb’s call for urgent economic reforms and the need for structural changes in Pakistan’s financial and climate financing systems reflects the country’s pressing need for comprehensive action to restore credibility and secure sustainable growth.