ISLAMABAD – The Asian Development Bank (ADB) has approved contingent disaster financing (CDF) facilities totalling $500 million under its policy-based lending to help Pakistan withstand and respond to disasters, according to a statement issued on Wednesday.
The CDF will provide prompt budget support after eligible disaster events, with the aim of reducing their economic and fiscal impact. The mechanism is designed to make budget support available after qualifying emergencies rather than to finance individual reconstruction projects.
How the financing works
The ADB said the package forms the second subprogram of its Climate and Disaster Resilience Enhancement Program. It supports reforms to strengthen disaster preparedness and risk management, and to integrate resilience measures into Pakistan’s development planning and investment.
The bank added that the programme also strengthens Pakistan’s disaster risk financing framework and improves the availability of financing after disaster events.
Pakistan’s disaster exposure
According to the ADB, floods, earthquakes and other disasters cost Pakistan an estimated $2 billion a year on average. The 2022 floods illustrated the scale of the risk. Government estimates put the death toll at about 1,700, with 33 million people affected and losses of $30 billion.
ADB comment
ADB Country Director for Pakistan Emma Fan said vulnerable communities are often the hardest hit when disaster strikes. She added that investing in preparedness can help protect lives and livelihoods, reduce economic losses and safeguard Pakistan’s development gains.
Earlier ADB support
In October 2024, the ADB approved a $500 million policy-based loan to support climate change and disaster risk reduction and resilience in Pakistan, along with a $1 million technical assistance grant.
The ADB statement, as reported, did not provide details on the repayment terms or the conditions that would trigger a drawdown of the new facilities.
