By Malik Bilal
Pakistan’s vulnerability to climate change is no longer a projection of the future. It is a lived reality that unfolds with every passing year. The floods of 2022 displaced over 33 million people and caused losses exceeding USD 30 billion, while recurring droughts and record-breaking heat-waves have devastated livelihoods across the country. These events reveal an undeniable truth: unless Pakistan aligns its financial systems with climate priorities, resilience efforts will remain fragmented and underfunded.
This is where Climate Budget Tagging (CBT) becomes critical. CBT is a tool that tracks and classifies public expenditures related to climate change within national and subnational budgets. It ensures that money allocated for climate action is visible, traceable and accountable. More importantly, it demonstrates to citizens and international partners that Pakistan is serious about building resilience through transparent and targeted investments.
At the federal level, Pakistan has made significant progress. The Ministry of Finance has introduced climate budget tagging into the federal Public Financial Management system. Line ministries now identify climate-relevant allocations in their annual budget proposals, which are then consolidated in a CBT report. This allows policymakers and development partners to see how much is being invested in climate adaptation and mitigation. For Pakistan, a country consistently ranked among the top ten most vulnerable nations in the Global Climate Risk Index, this is not just a bureaucratic exercise. It is a strategic move to strengthen credibility in climate finance negotiations and attract international support.
Yet the real test lies beyond Islamabad. Provinces remain far behind in adopting climate budget tagging. Given that Pakistan’s federal system allocates significant fiscal responsibilities to provincial governments, their lack of structured CBT is a critical gap. Provinces manage crucial sectors such as agriculture, water, forestry and disaster management, all of which are highly climate-sensitive. Without provincial adoption, Pakistan cannot build a complete picture of its climate spending, nor can it direct resources to where they are most urgently needed.
Consider the case of Sindh and Balochistan, provinces that bore the brunt of the 2022 floods. While they mobilized emergency funds for relief and rehabilitation, there was no systematic mechanism to tag these expenditures as climate-related. This makes it difficult to assess whether spending was effective or aligned with long-term resilience goals. Khyber Pakhtunkhwa and Punjab face similar challenges. Despite having climate policies on paper, their financial systems lack the tagging frameworks necessary to track climate expenditure in real time.
International experience shows how powerful CBT can be when fully institutionalized. Bangladesh has integrated climate budget tagging across more than 20 ministries, publishing annual climate budget reports that enhance transparency and help mobilize international support. Indonesia has adopted a similar system, aligning its national budget with climate goals and reporting progress to global partners. The Philippines uses CBT to ensure that disaster risk reduction and climate adaptation receive consistent and accountable funding. These examples prove that climate budget tagging is not only feasible in developing countries but also a catalyst for strengthening fiscal governance and credibility.
Pakistan’s provincial governments can learn from these models. The starting point is embedding CBT within their budget call circulars so that departments are required to identify climate-relevant spending during budget preparation. This would ensure that climate allocations are not treated as ad hoc or secondary but as integral components of fiscal planning. Capacity building will also be key. Provincial finance departments and line ministries need training to apply climate markers classify expenditures correctly and generate consolidated reports. Without technical capacity, CBT risks becoming a formality rather than a tool for accountability.
Technology can further support this process. Digital platforms that integrate budget classification with climate markers can reduce errors and improve real-time monitoring. At the federal level, such systems have already been piloted with support from development partners. Extending these innovations to provinces will not only harmonize reporting but also provide Pakistan with a unified picture of national climate finance.
The benefits of climate budget tagging go beyond transparency. By institutionalizing CBT, Pakistan can demonstrate to international donors and climate funds that it has the systems in place to manage resources effectively. This is critical at a time when Pakistan needs an estimated USD 348 billion by 2030 to meet its climate and development goals. Without a clear accounting of climate spending at both federal and provincial levels, mobilizing such financing will remain an uphill battle.
To move forward, three actions are essential. First, provinces must urgently adopt and institutionalize CBT within their budgetary processes. Second, capacity building and technical support should be scaled up to ensure correct application of climate markers. Third, a national coordination mechanism should be established to harmonize federal and provincial reporting, creating a single climate finance picture for Pakistan.
The federal government has already shown that climate budget tagging is possible, practical and beneficial. Now the provinces must follow suit. The climate crisis will not wait for Pakistan’s financial systems to catch up. By institutionalizing CBT at every level, Pakistan can ensure that every rupee spent on climate action is visible, accountable and impactful.
About the Author: Malik Bilal is a development professional with expertise in emergency response, recovery and governance in conflict-affected areas of Pakistan. He has worked with UN agencies and international organizations to strengthen resilience, support reforms and deliver strategic programs.
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