By The South Asia Times

ISLAMABAD - Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb underscored Pakistan’s urgent climate vulnerabilities and outlined the country’s forward-looking financing strategy during a high-level panel titled “Climate Adaptation & Resilience: How do we secure the capital we need?” at the Global Development Finance Conference – Momentum 2025, held in Riyadh.

The session brought together senior global finance leaders, including Jordan’s Minister of Planning and International Cooperation H.E. Zeina Toukan, Tajikistan’s Finance Minister H.E. Qahhorzoda Faiziddin, and West African Development Bank President Serge Ekue, to examine the rising challenges of climate adaptation for emerging economies, Finance Ministry in a statement on Thursday.

Speaking about Pakistan’s recent experience with extreme weather, Aurangzeb said climate change has become an increasingly tangible and costly reality for the country. Recalling the catastrophic 2022 floods, which caused an estimated US$30 billion in losses, and renewed flooding this year, he warned that both the frequency and intensity of climate disasters are accelerating. Pakistan, he said, expects to lose nearly half a percentage point of GDP growth this year due to climate impacts.

The minister noted that Pakistan’s commitment to macroeconomic stability has enabled the creation of sufficient fiscal and external buffers to manage immediate rescue and relief operations through domestic resources. However, rehabilitation and reconstruction, he stressed, require substantial external financing.

Highlighting recent institutional improvements, Aurangzeb pointed to the establishment of an AI-enabled early warning system at Pakistan’s National Emergency Center, which now provides month-by-month climate forecasts for proactive planning. Despite these advances, he said the country’s financing needs far exceed its domestic capacity, making multilateral partnerships and private capital essential.

On balancing development priorities with climate needs, Aurangzeb said Pakistan remains committed to emissions mitigation but faces a far more urgent challenge in adaptation financing. He cited Pakistan’s 10-year Country Partnership Framework with the World Bank Group—valued at roughly US$20 billion, one-third of which is earmarked for climate resilience and decarbonization. Unlocking these resources, he emphasized, requires Pakistan to rapidly develop high-quality, bankable projects.

Aurangzeb voiced concern over slow and bureaucratic global climate financing mechanisms, including the Green Climate Fund and the Loss and Damage Fund, describing their accreditation processes as barriers for vulnerable countries. In contrast, he welcomed recent progress through multilateral partners, including Pakistan’s receipt of the first US$200 million tranche under the IMF Climate Resilience Fund.

He reiterated that while fiscal resources will continue to be allocated domestically, external financing—both from development partners and international capital markets—remains indispensable to Pakistan’s adaptation agenda. He called for a pragmatic approach focused on deploying available resources while working to close the broader financing gap.

Addressing questions on foreign investment and climate-aligned growth, the finance minister said finance ministers must lead the global effort to integrate climate priorities into national budgets. He noted strengthened Pakistan–U.S. ties, particularly in minerals, mining, and advanced technologies such as AI, blockchain, and digital infrastructure.

Discussing Pakistan’s flagship Reko Diq copper mining project, Aurangzeb described it as a transformative initiative for Pakistan’s economic future and energy transition. The financial close—valued at US$7 billion with IFC leading the syndication and U.S. EXIM Bank joining as a key participant—marks a major milestone.

He said the mine is expected to generate export revenues equivalent to 10 percent of Pakistan’s current export base in its first year of commercial operation in 2028, positioning it as a major driver of growth and foreign exchange earnings. He added that Pakistan anticipates strong investor interest from the United States, China, the GCC, and beyond as the project expands.

On geopolitical balancing between major powers, Aurangzeb said Pakistan follows an “and-and” approach to global partnerships. He reaffirmed China’s role as a longstanding ally through the China-Pakistan Economic Corridor (CPEC), noting that Phase 2.0 aims to commercialize existing infrastructure through business-to-business cooperation, building on earlier government-to-government initiatives. Pakistan, he said, is well-positioned to maintain productive relations with both the U.S. and China.

The session concluded with a shared call for deeper regional and international cooperation to help vulnerable countries strengthen resilience and sustainable growth. Panelists agreed that despite mounting challenges, innovation, collaboration, and smarter financing can enable emerging economies to protect their populations, safeguard their economies, and contribute meaningfully to global climate goals.