KARACHI: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Friday the Pakistan government was working to issue domestic green sukuk bonds by December 2024 to fund environmentally sustainable infrastructure projects.
The green sukuk is a Shariah-compliant interest-free bond in which instead of interest, investors receive an agreed share of the profits generated by the pool of underlying assets, which are partially owned by investors. Proceeds of green bonds are used to finance climate change mitigation and adaptation, and environmental projects.
“The government is working on issuing domestic green sukuk bonds by December 2024 to finance sustainable development projects,” Aurangzeb said as he delivered an online keynote speech at the UK-Pakistan Green Investment Forum, organized by the British High Commission in Pakistan.
In his address, the finance minister emphasized Pakistan’s commitment to addressing climate change and promoting green investment opportunities, and highlighted Pakistan’s vulnerability to the adverse effects of climate change, despite its low contribution to global greenhouse gas emissions.
According to a recent World Bank study, Pakistan faces potential annual GDP losses of up to 1 percent due to climate-related risks.
Acknowledging a significant funding gap in adaptation, resilience, and mitigation projects and the need for a better portfolio of green investment projects, the minister emphasized Pakistan’s reliance on the private sector for support in this regard and highlighted the government’s efforts to enhance investor confidence in bankable green opportunities.
He also outlined Pakistan’s plans to utilize innovative financing instruments like green sukuk to raise international climate finance.
Pakistan ranks among the top 10 countries worldwide most affected by climate change and natural disasters.
