Federal Minister for Finance and Revenue, Muhammad Aurangzeb on Thursday underscored the urgency of mobilising climate finance to safeguard Pakistan’s economic and environmental future, calling climate change and population growth existential threats to national survival.

He was speaking at a high-level plenary on “Mobilising Finance for a Circular, Climate-Resilient South Asia: Blended Finance, Regional Funds and Private Capital,” organized by the Sustainable Development Policy Institute (SDPI) here.

Aurangzeb said climate financing is a global challenge rapidly rising up the policy agenda, and Pakistan must move decisively to align its fiscal, regulatory, and institutional frameworks to attract sustainable investment. “Global GDP growth is improving, and Pakistan, too, is implementing structural reforms to stabilise its economy and boost investor confidence,” he said.

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The finance minister emphasised that the private sector’s growing engagement in the economy is a positive signal, noting that innovative financial instruments and digital platforms can accelerate Pakistan’s green transition. He said that geopolitical tensions and global uncertainty have made the challenge even more complex.

Aurangzeb said that Pakistan has already established the Virtual Asset Regulatory Authority (VARA) under an ordinance to regulate crypto and digital assets, while a Pakistan Crypto Council has been created to develop this ecosystem responsibly. He said the government plans to introduce formal legislation soon, viewing digital finance as a tool to enable climate-related investment and innovation.

The finance minister highlighted that Pakistan has secured the USD 1.3 billion climate financing agreement with the IMF, while the Asian Development Bank (ADB) has pledged USD 500 million, and the World Bank’s ten-year Country Partnership Framework will bring in US 2 billion annually. He also disclosed that Pakistan will soon issue Panda Bonds in the Chinese capital market.

Aurangzeb said the government is on the right path in implementing economic reforms and that climate and population challenges must be addressed before Pakistan marks its centenary in 2047. “We don’t need new institutions or constitutional amendments to do this,” he said. “What we need is commitment and continuity.”

Zafar Masud, Chairman of the Pakistan Banking Association and CEO of Bank of Punjab, called for the establishment of a Regional Climate Bank to mobilise and manage funds for climate-related projects across South Asia. He argued that climate change is a shared regional challenge and proposed including climate financing under the 27th Constitutional Amendment to ensure long-term policy integration.

Masud underscored that blended finance — combining public and private capital — is essential to de-risk conventional lending. “We must explore regional solutions,” he said, stressing that a clear taxonomy for green finance and specialised development finance institutions (DFIs) are required to scale up investments. He identified the lack of bankable projects and weak coordination between the federal and provincial governments as major hurdles in attracting climate funding. “Projects lie with the provinces, but coordination and capacity gaps persist,” he noted, urging the capital market to play a stronger role in climate finance mobilisation.

Zulfiqar Younas, Additional Secretary and Head of Climate Finance at the Ministry of Climate Change, said that circularity is vital for transitional economies like Pakistan, which cannot afford wastage in the face of resource scarcity. He called for a regional approach in South Asia to promote circular and climate-resilient development.

Younas said that blended finance is the emerging global trend and revealed that Pakistan is currently developing its Carbon Policy, while the SECP’s sustainability guidelines are expected to play a key regulatory role in mainstreaming green finance.

Dr. Pushpam Kumar, Chief Environmental Economist at UNEP, said that South Asian and African economies need to prioritise blended finance to leverage limited public resources. He stressed the importance of credible carbon pricing and urged a “course correction” through a comprehensive national action plan for mitigation and adaptation. “Policy coherence and an enabling regulatory framework are missing for blended finance,” Dr. Kumar observed. “We also need to build national capacity to attract such financing effectively.”

He further argued that economies must move beyond GDP as a measure of progress and instead focus on inclusive wealth — the combined stock of natural, human, and produced capital. “We must measure how much wealth we are gaining or losing each year,” he said.

Dr. Premkumara Jagath from the Institute for Global Environmental Strategies, Japan, said that South Asia must abandon the linear development model and transition to a circular economy that prioritises resource efficiency and sustainable lifestyles. “Blended finance is key to enabling this transformation,” he added.

Dr. Paras Kharel, Executive Director of SAWTEE, Nepal, pointed out that developing countries often fail to benefit from international mechanisms like the Clean Development Mechanism (CDM) due to limited capacity to design bankable projects. He warned that cross-border carbon tariff adjustments by developed economies could become a new form of non-tariff barrier for South Asian exporters.

Dr. AbidQaiyumSuleri, Executive Director of SDPI, said that financing remains the backbone of all climate action. He reminded participants that under the Paris Agreement, developed countries estemated $1 trillion for climate finance but only $300 billion amid that too Blended financing was pledged.

He posed critical questions: “Can the public sector absolve itself of responsibility? How much can the private sector contribute? And will blended finance really work in Pakistan?”

The plenary also saw the launch of SDPI’s report titled “Beyond Pledges: Unlocking Pakistan’s Domestic Climate Finance Potential,” which provides a roadmap for mobilising local and regional resources to build a climate-resilient economy.