ADB grants $500m loan for Pakistan's climate, disaster resilience programme

The Asian Development Bank (ADB) has approved a $500 million policy-based loan aimed at supporting climate change adaptation and disaster risk reduction in Pakistan.

This funding will be allocated through the Climate and Disaster Resilience Enhancement Program (CDREP), designed to bolster the country’s capacity for planning, preparedness, and response to natural disasters.

According to an ADB press release on Tuesday, the program will facilitate inclusive investments in disaster risk reduction and climate resilience while promoting a risk-layered approach to disaster financing.

Pakistan is identified as one of the most vulnerable countries in Asia and the Pacific, facing annual average losses exceeding $2 billion from disaster events, with women and other vulnerable groups disproportionately affected.

“This program builds on ADB’s longstanding work in Pakistan to understand and reduce climate and disaster risks and support effective disaster response,” said ADB Director General for Central and West Asia, Yevgeniy Zhukov.

“We are proud to support an integrated and comprehensive approach to climate and disaster risk management, including a portfolio of disaster risk financing instruments for timely and adequate funding for disaster response.”

The CDREP aims to enhance disaster risk mapping and modelling capabilities for informed investment and development decisions, improve coordination for disaster monitoring and response, and prioritise gender-sensitive and resilient public investments. This includes integrated flood risk management and nature-based solutions.

Additionally, the program will mobilise climate finance from both public and private sources, including the issuance of a domestic green sukuk (Islamic bond).

Notably, it will employ ADB’s Contingent Disaster Financing option for the first time in the Central and West Asia region, providing rapid budget support in the event of a disaster.

The initiative will also establish a solidarity fund to promote risk transfer solutions like agricultural insurance and support shock-responsive social protection mechanisms to deliver cash assistance during disasters.

ADB has additionally approved a $1 million technical assistance grant to aid in the program's implementation.