Pakistan to prioritise climate-friendly projects in development plans

ISLAMABAD: With the imposition of a Carbon Levy from the next budget, Pakistan has accepted the IMF’s demands to update project selection and increase climate change weighting criteria by August 2026.

Pakistan has accepted the IMF condition to publish the Planning Commission (PC-1) forms of all new infrastructure projects costing over Rs7.5 billion on the PC website. Top official sources confirmed that the government will improve project appraisals and climate screening assessments to prioritise the most impactful infrastructure.

Pakistan and the IMF have agreed to expand the federal government’s budget tagging system to incorporate spending on grants and subsidies and will extend the same methodology to tagging the spending by provincial governments, said the official.

It also committed to the IMF to work towards tagging and tracking of climate-harmful expenditure and harmonising budget tagging with other green taxonomies. The government will update the project selection criteria for the Public Sector Development Programme (PSDP) to prioritise climate-friendly projects. 

Climate change considerations will account for at least 30pc of the selection criteria for infrastructure projects. A transparent scoring system will be developed with explicit protocols for evaluating projects. 

The government will publish the distribution of scores for new projects by August 2026. Additionally, Pakistan will report on the selection process and publish scores for each project approved by CDWP and ECNEC annually. 

Pakistan will also implement adaptation and mitigation assessment till the end of August 2027. All new major infrastructure projects will undertake climate vulnerability, adaptation, and mitigation assessments as a critical requirement for inclusion in PSDP.