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Climate change

Pakistan Announces First Climate-Focused Budget for 2025-26

Strategic Insights

— 3 min read

Pakistan's Minister of State for Climate Change and Environmental Coordination, Dr Shezra Mansab Ali Khan Khara, has announced the country's first climate-focused budget for the fiscal year 2025-26, with 30% of all public development projects undergoing a Climate Public Investment Management Assessment (CPIMA). This significant shift aims to integrate climate considerations into national economic planning, marking a crucial step towards ensuring sustainability and resilience in the face of climate-related challenges. The budget announcement was made during the Pre-Budget Dialogue 2025, titled 'Rethinking Economic Policy for a Just Energy Transition,' organized by the Sustainable Development Policy Institute (SDPI) in collaboration with the Policy Research Institute for Equitable Development (PRIED).

Key Takeaways:

  • Pakistan's first climate-focused budget for 2025-26 prioritizes climate considerations in national economic planning, with 30% of public development projects undergoing a Climate Public Investment Management Assessment (CPIMA).
  • Climate change poses significant challenges to Pakistan, including increased vulnerability to climatic risks affecting agriculture, water scarcity, and constraints imposed by the IMF's austerity program.
  • Energy sector inefficiencies and circular debt continue to strain the national budget, necessitating a transition to sustainable energy solutions.
  • Dr Abid Qaiyum Suleri emphasized the economic imperatives driving the energy transition, highlighting rising fuel prices and the liberalization of the second-hand automobile market could accelerate the adoption of hybrid and electric vehicles.
  • Khalid Mansoor, Senior Fellow at the Pakistan Regional Economic Forum, stressed the importance of tripartite collaboration involving Pakistan's private sector, international investors, and China to synchronize capital across multiple domains.
  • Pakistan's economic policy has been primarily focused on stabilization, often neglecting sustainability goals, according to Dr Sajid Amin Javed, Deputy Executive Director of SDPI.
  • Pakistan has achieved 47% clean energy generation in its current energy mix, according to Shah Jahan Mirza, Managing Director of the Private Power and Infrastructure Board (PPIB).
  • Energy issues in Pakistan are rooted in governance and management challenges rather than just energy costs or inefficiencies, as emphasized by Dr Khaqqan Najeeb, senior economist.
  • Shiraz Shah, Head of Resilience, Environment, and Climate Change at UNDP, underscored that energy transition is a governance issue requiring a multi-sectoral approach.
  • Malik Amin Aslam, former Special Assistant to the Prime Minister on Climate Change, highlighted that Pakistan cannot circumvent the impacts of climate change, which could force the country to spend 9% of its GDP on resilience efforts.
  • The IMF has updated its framework to include climate change considerations, transitioning from PIMA to CPIMA, according to Dr Khalid Waleed.

Statistics:

  • 30% of all public development projects will undergo a Climate Public Investment Management Assessment (CPIMA) in Pakistan's first climate-focused budget for 2025-26.
  • 47% of Pakistan's current energy mix is comprised of clean energy generation, according to Shah Jahan Mirza, Managing Director of the Private Power and Infrastructure Board (PPIB).
  • 9% of Pakistan's GDP could be spent on resilience efforts due to climate change impacts, as emphasized by Malik Amin Aslam, former Special Assistant to the Prime Minister on Climate Change.
  • About 20% of public sector investments should be dedicated to climate-supporting and climate-resilient projects, according to Dr Khalid Waleed.
  • 4 million people in Karachi live in non-resilient housing, including 1 million registered slum dwellers, as revealed by MNA Arshad Abdullah Vohra (MQM Pakistan).

Sources:

  • Press release from the Sustainable Development Policy Institute (SDPI) and the Policy Research Institute for Equitable Development (PRIED)
  • Statement by Dr Shezra Mansab Ali Khan Khara, Minister of State for Climate Change and Environmental Coordination
  • Presentation by Dr Abid Qaiyum Suleri, Executive Director of SDPI
  • Remarks by Khalid Mansoor, Senior Fellow at the Pakistan Regional Economic Forum
  • Address by Dr Sajid Amin Javed, Deputy Executive Director of SDPI
  • Presentation by Shah Jahan Mirza, Managing Director of the Private Power and Infrastructure Board (PPIB)
  • Statement by Dr Khaqqan Najeeb, senior economist
  • Remarks by Shiraz Shah, Head of Resilience, Environment, and Climate Change at UNDP
  • Address by Malik Amin Aslam, former Special Assistant to the Prime Minister on Climate Change
  • Remarks by Dr Khalid Waleed
  • Presentation by MNA Arshad Abdullah Vohra (MQM Pakistan)
  • Remarks by Sanaullah Baloch, former Senator and current Member of the Provincial Assembly of Balochistan

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