By Staff Reporter
ISLAMABAD: The Asian Development Bank approved as much as $500 million in contingent disaster financing for Pakistan, giving the flood-prone country a faster route to emergency budget support after floods, earthquakes and other catastrophes.
The Manila-based lender said in a statement on Wednesday that the facilities will provide prompt budget support after eligible disaster events, with the aim of limiting the economic and fiscal damage that follows. The money comes under the second phase of the Climate and Disaster Resilience Enhancement Program and falls within ADB’s policy-based lending, which makes budget support available after qualifying emergencies rather than paying for individual reconstruction projects.
Pakistan loses an estimated $2 billion a year on average to disasters, according to ADB. The 2022 floods alone caused $14.9 billion in direct damage and $15.2 billion in economic losses, and pushed as many as 9.1 million people into poverty, the bank said. Poor and rural communities have less capacity to recover, and women and girls are disproportionately affected, it said.
The program backs reforms meant to strengthen disaster preparedness and risk management and to build resilience into Pakistan’s development planning and public investment. It also seeks to reinforce the country’s disaster risk financing framework and improve the availability of money once a disaster hits, ADB said. The bank described the effort as consistent with Pakistan’s own priorities and with its commitment to resilience work across Asia and the Pacific.
“When disaster strikes, it is often the most vulnerable communities that are hit hardest,” Emma Fan, ADB’s country director for Pakistan, said in the statement. She said investing in preparedness can protect lives and livelihoods, and that the program will help the country carry out the reforms needed for a more resilient future.
The approval follows a $500 million policy-based loan ADB announced in October 2024 under the same program. That package included a $1 million technical assistance grant to support implementation, and it marked the first use of ADB’s contingent disaster financing option in the Central and West Asia region. Pakistan is a founding member of the bank, which had committed more than $52 billion in public and private financing to the country since 1966 at the time of that approval.
The need for such tools was laid bare again last year. The 2025 monsoon season left more than 1,000 people dead nationwide. In Punjab alone, more than 4.7 million people across about 4,700 villages were affected. The floods submerged entire districts, displaced millions and wiped out livelihoods.
A report by the Jinnah Institute think tank in May said persistent governance failures and weak community-level systems continue to undermine Pakistan’s ability to prepare for and respond to climate disasters. It called for urgent reforms to build long-term resilience across vulnerable districts. The think tank argued that reliance on reactive disaster management has proven insufficient as climate stress intensifies, and said the 2025 floods exposed gaps in preparedness despite years of policy frameworks, institutional reforms and international commitments.
The ADB financing arrives as Pakistan works to keep other multilateral support flowing. The International Monetary Fund reached a staff-level agreement in October on reviews of Pakistan’s $7 billion Extended Fund Facility and a separate $1.4 billion climate resilience facility, which would give the country access to about $1.0 billion and $210 million, respectively, once the lender’s executive board signs off. If approved, total disbursements under the two programs would rise to about $5.7 billion. The IMF has urged Islamabad to implement its 2026-27 budget consistently, targeting an underlying primary surplus of 2% of gross domestic product.
Pakistan contributes a relatively small share of global greenhouse gas emissions yet ranks among the countries most exposed to climate-related disasters, and it is contending with tight public finances and the need to rebuild critical infrastructure. Its prime minister was among the leaders at the COP31 climate talks in Türkiye this week, Arab News reported.
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