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Climate change

Pakistan's First Climate-Focused Budget to be Introduced in FY 2025-26

Strategic Insights

— 2 min read

A significant shift in Pakistan's economic planning has been announced by Dr Shezra Mansab Ali Khan Kharal, Minister of State for Climate Change and Environmental Coordination, with the introduction of its first climate-focused budget for the fiscal year 2025-26. The budget will subject 30% of all public development projects to undergo a Climate Public Investment Management Assessment (CPIMA). The decision comes amidst multifaceted challenges facing Pakistan, including increased vulnerability to climatic risks affecting agriculture, water scarcity exacerbated by India's suspension of the Indus Water Treaty, and constraints imposed by the IMF's austerity programme limiting development expenditures.

Key Takeaways:

  • Pakistan's first climate-focused budget will be implemented for the fiscal year 2025-26, with 30% of public development projects undergoing a Climate Public Investment Management Assessment (CPIMA).
  • Dr Shezra highlighted the challenges facing Pakistan, including increased vulnerability to climatic risks, water scarcity, and constraints imposed by the IMF's austerity programme.
  • Sanaullah Baloch, MPA from Balochistan, argued that the ongoing insurgency and conflict in his province are rooted in the unjust distribution of its resources, including the concentrated distribution of gas reserves.
  • Dr Abid Qaiyum Suleri emphasized the economic imperatives driving the energy transition, including rising fuel prices and the liberalization of the second-hand automobile market.
  • Former Governor of the State Bank of Pakistan, Shahid Hafeez Kardar, advocated for shifting from reactive subsidies to proactive investments, including the use of green bonds and performance-based incentives to finance climate initiatives.
  • Senior economist Dr Khaqqan Najee called for a unified and authoritative energy regulator to develop a competitive energy market and harmonize climate budgeting to create greater fiscal space.
  • Economist Afia Malik stressed the need for equitable fiscal policies that do not disproportionately affect vulnerable populations, suggesting carbon taxes on emitting energy sources would transfer the burden to final consumers.

Statistics:

  • Only 20% of Balochistan has grid access, compared to Punjab's 95%, Sindh's 85%, and KP's 80%.
  • Pakistan discovered natural gas in 1955, with Balochistan's gas contributing to $200 billion in value.
  • The industrial revolution across Pakistan was driven by Balochistan's gas, likening energy to the "bloodstream of a nation."

Sources:

  • Dr Shezra Mansab Ali Khan Kharal's address at the Pre-Budget Dialogue on "Rethinking economic policy for a just energy transition"
  • Policy Research Institute for Equitable Development (PRIED)
  • Sustainable Development Policy Institute (SDPI)
  • Various speakers at the Pre-Budget Dialogue, including Sanaullah Baloch, Dr Abid Qaiyum Suleri, Shahid Hafeez Kardar, Khalid Mansoor, Dr Khaqqan Najee, and Afia Malik.

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