FM Ishaq Dar Calls for Honour of Climate Finance Pledges and Reforms in Financial Architecture
At the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29), Deputy Prime Minister and Foreign Minister of Pakistan, Muhammad Ishaq Dar, highlighted the critical need for developed nations to honour their climate finance pledges, offering accessible and grants-based financing to help developing countries meet their climate goals. Speaking at a high-level event on “Delivering Early Warnings for All (EW4All) and Addressing Extreme Heat,” Dar reaffirmed Pakistan’s commitment to climate action, emphasizing early warning systems to protect communities from climate-induced disasters like floods and extreme heat.
Dar detailed Pakistan’s initiatives to reduce greenhouse gas emissions, including the Green Pakistan Project, Electric Vehicle Policy, and large-scale mangrove rehabilitation. He emphasized the urgency of early warning systems, noting that Pakistan, consistently ranked among the top ten countries most impacted by climate change, experienced a $30 billion loss and affected 33 million people in the 2022 floods. An early warning system, Dar stated, could have mitigated much of this devastation.
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In a separate address on “Innovative Finance Facility for Climate in Asia and the Pacific,” Dar criticized the existing international financial structure, saying it is “skewed against climate-responsive investment” in emerging markets, where climate finance costs are up to 80% higher than in developed countries. He pointed out that 80% of climate financing remains within developed economies, leaving adaptation and loss and damage initiatives in developing countries significantly underfunded.
Dar proposed structural reforms, including reforming multilateral development banks (MDBs) and the IMF to scale currency risk hedging for low- and middle-income countries. He urged support for local currency bonds, currency swaps, and improved Debt Sustainability Assessment methodologies to incorporate climate risk. Dar called for new climate financing on concessional terms, while advocating for rating agencies to reconsider high-risk premiums and arbitrary rates for developing countries.
Pakistan, facing an urgent need for $348 billion to achieve climate resilience by 2030, spends 20% of its annual public sector program on climate-responsive investments. With a National Climate Finance Strategy in place, Pakistan has also developed a Sustainable Finance Framework and Carbon Market Guidelines to mobilize resources for climate-smart initiatives and sustainable economic transition.
Dar welcomed the “Innovative Finance Facility for Climate in Asia and the Pacific” (IF-CAP) initiative, which aims to mobilize $11 billion for climate finance through guarantees provided by IF-CAP partners. He praised the project, noting its potential to unlock crucial resources at a time when developing countries negotiate for an ambitious new quantified climate finance goal (NCQG). The commitment from this global coalition, Dar said, represents a significant step toward accessible climate finance for countries facing the highest climate risks.
In closing, Dar expressed gratitude to ADB and IF-CAP financing partners for their dedication to the region’s climate resilience and expressed optimism for a collective commitment to addressing the climate crisis. He also welcomed IF-CAP’s support for Pakistan’s Sustainable Aviation Fuel Facility, which promotes climate priorities and generates gender-inclusive local employment.
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