SBP calls for increase in green financing to mitigate the impacts of climate resilience
State Bank of Pakistan (SBP) Governor Jameel Ahmad has underscored the
urgent need to significantly increase credit allocation for projects that
promote climate resilience and sustainable growth. Addressing an event titled “Enabling
Green Financing and Green Bonds via Credit Enhancement Solutions”,
organized by InfraZamin Pakistan, Ahmad called on the financial sector to align
with global sustainability trends, which are crucial for both Pakistan’s
national priorities and its international climate commitments.
“We must leverage the potential of our financial sector to drive the
transition toward sustainability, ensuring that we not only contribute to
global climate goals but also foster economic growth that is environmentally
responsible,” Ahmad stated.
The Governor emphasized the pressing need for action on climate change,
referencing the devastating floods of 2022, which caused an estimated $30
billion in economic losses in Pakistan. He reiterated Pakistan’s commitment to
the Paris Agreement, including a target to reduce emissions by 15% by 2030,
with an additional 35% reduction contingent upon external financing. Ahmad also
outlined the government’s ambition to generate 60% of the country’s energy from
renewable sources in the coming years.
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Notably, he highlighted Pakistan’s accelerating shift away from fossil
fuels, pointing to global data from the Energy Institute that shows the share
of fossil fuels in Pakistan’s energy mix has dropped by nearly 5 percentage
points, from 86.7% in 2019 to 81.9% in 2023.
The Governor also acknowledged the government’s efforts to bolster the
country’s resilience to climate change impacts. These initiatives include the Resilient
Recovery, Rehabilitation, and Reconstruction Framework and the National
Clean Air Policy, as well as support for the adoption of electric and
hybrid vehicles.
On the role of the SBP, Ahmad outlined several initiatives designed to
accelerate green financing. By the end of June 2024, SBP’s refinancing schemes
for renewable energy will have disbursed Rs 94.7 billion, funding over 4,500
renewable energy projects with a combined generation capacity of nearly 2,061
MW. Additionally, SBP has issued Green Banking Guidelines to help financial
institutions manage environmental risks and support green investments.
Ahmad also shared that SBP, in partnership with the World Bank, is
developing a comprehensive Green Taxonomy—a standardized framework for
classifying green and transitional activities. “This will provide clarity on
what qualifies as green, helping to channel more capital into sustainable
projects,” he explained.
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As part of SBP’s broader strategy, climate change risk has been incorporated
as a key theme in its Strategic Plan 2023-28. This five-year roadmap
includes goals for technological innovation, diversity, inclusion, and enhanced
competitiveness, all aimed at ensuring sustainable economic growth.
Looking ahead, Ahmad shared positive projections for the country’s economic
recovery. He noted that the Asian Development Bank is expected to provide an
additional $500 million, and the country’s economic growth is projected to
exceed 3% for fiscal year 2025, in line with SBP’s target range of 2.5-3.5%.
Ahmad also provided an update on Pakistan’s foreign exchange reserves, which
are expected to rise to $12 billion by November, up from $11.17 billion,
following a $1 billion loan tranche from the International Monetary Fund (IMF)
in September. He anticipates reserves will increase to $13 billion by the end
of the fiscal year in June 2025.
Source: Express Tribune