ADB approves US$500 million loan for Pakistan

MANILA: The Asian Development Bank (ADB) approved a US$500 million policy-based loan to support climate change and disaster risk reduction and resilience in Pakistan.

In a statement issued here, the ADB maintained that the Climate and Disaster Resilience Enhancement Program (CDREP) will strengthen Pakistan’s institutional capacity for planning, preparedness, and response; increase inclusive investment in disaster risk reduction and climate resilience; and support the scale up of disaster risk financing using a risk-layered approach.

“Pakistan is one of the most vulnerable countries to climate change and disasters triggered by natural hazards in Asia and the Pacific. Average losses from disaster events exceed US$2 billion per year,” the statement read.

It added that women and other vulnerable groups are disproportionately affected by climate change and disaster events.

“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 program supports enhanced capacity for disaster risk mapping and modeling for investment and development decisions. It enhances coordination for disaster monitoring and response. It supports enhanced planning and prioritization of gender-sensitive and resilient public investments, including integrated flood risk management and nature-based solutions.

The program supports mobilisation of climate finance from public and private sources.

“This includes issuance of a domestic green sukuk (Islamic bond). A key innovation of the program is the use of ADB’s Contingent Disaster Financing option for the first time in the Central and West Asia region,” the ADB maintained.

It added that the program will provide quick disbursing budget support in the event of a disaster. The program will support the establishment of a solidarity fund to facilitate the uptake of risk transfer solutions such as agriculture insurance.

“The program also supports shock-responsive social protection to deliver cash assistance in the event of a disaster,” the statement read.

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The ADB also approved a technical assistance grant of USUS$1 million to support the implementation of the program.

Pakistan is a founding member of the ADB and since 1966, the bank has committed over US$52 billion in public and private sector loans, grants, and other forms of financing to promote inclusive economic growth in Pakistan and improve the country’s infrastructure, energy and food security, transport networks, and social services.

“ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.”