Lawmakers, experts urge climate strategies in fiscal planning

ISLAMABAD: Parliamentarians and policy specialists on Monday called on the government to incorporate climate priorities into national budget planning without delay, warning that environmental shocks could undermine economic growth and food security if fiscal policy does not account for climate risks.

The appeal was made at a parliamentary consultation on Mainstreaming climate considerations in Pakistan’s economic and budgetary planning, organised by the Sustainable Development Policy Institute (SDPI) and the Embassy of Denmark. Participants said climate and environmental concerns could no longer be handled separately from wider economic and political decision-making, and argued that green budgeting tools were needed to prevent long-term damage to development gains.

Danish Ambassador to Pakistan Maja Mortensen said the consultation came at an important time alongside the federal budget process. She said climate resilience and economic development should be seen as mutually reinforcing rather than competing goals, and offered Denmark’s experience and technical cooperation for integrating climate priorities into development planning.

“The diagnosis of the problem already exists; the challenge now is how to translate it into policy action,” Mortensen said.

IMF-linked budget framework and shrinking finance

SDPI Executive Director Dr Abid Qaiyum Suleri said climate considerations should be built into both federal and provincial finance bills, particularly as Pakistan’s budget framework is being shaped under the International Monetary Fund’s Extended Fund Facility and Resilience and Sustainability Facility programmes. He said reforms supported by the IMF had encouraged higher allocations for disaster risk reduction, water conservation and renewable energy, adding that some of those commitments had already appeared in federal and provincial budgets.

Dr Suleri also cautioned that climate finance was declining globally and within Pakistan despite increasing climate-related pressures. PPP MNA Mirza Ikhtiar Baig said Pakistan remained one of the countries most affected by climate change even though it had contributed little to global emissions. Referring to the aftermath of the 2022 floods, he said much of the international reconstruction support pledged after the disaster had still not materialised. He also noted that Pakistan had obtained access to climate-related financing under the IMF’s Resilience and Sustainability Facility.

Concerns over security, agriculture and budget cuts

PPP MNA Asad Alam Niazi said climate change had become a national security issue and that public awareness of its economic and social effects remained inadequate. He said irregular weather patterns and climate-related disasters were hurting agriculture, livelihoods and overall economic productivity, while state funding for climate action was still too limited.

SDPI Deputy Executive Director (Research) Dr Sajid Amin Javed said climate change was causing annual losses equal to about 1.53 per cent of global GDP and warned that the toll could increase sharply in the coming decades if mitigation and adaptation were delayed. He said climate policy should be embedded in core fiscal planning rather than treated as a separate budget label.

“Climate change should not be treated as a separate budgetary tag; it must become a core pillar of fiscal and economic planning,” Dr Javed said.

He added that employment, poverty, inequality, food security and economic growth were now directly tied to climate resilience.

SDPI’s Head of Energy Unit, Engineer Ubaidur Rehman Zia, also underscored the need to integrate climate considerations into fiscal and economic planning. SDPI’s Head of Ecological Sustainability and Circular Economy, Zainab Naeem, said climate-related allocations in the federal budget for 2026-27 had fallen by around 70 per cent from the previous year. She said about Rs2,026 billion had been tagged as green-linked revenues, but added that major gaps remained in accountability and reporting on climate finance.

Former Private Power and Infrastructure Board managing director Shah Jahan Mirza said the petroleum development levy had increasingly been used to manage budget deficits. He called on regulators to prepare climate risk guidelines and urged a move away from reactive responses towards advance planning and dedicated budget allocations for climate adaptation.