Govt allocates Rs2.78b for climate change division

Budget 2026-27
The federal government has allocated Rs2.78 billion for the Climate Change sector in the development budget for fiscal year 2026-27, as Finance Minister Muhammad Aurangzeb presented the federal budget in the National Assembly on Friday. According to budget documents, the total federal budget outlay stands at Rs18.8 trillion, while Rs1,000 billion has been earmarked for the Public Sector Development Programme (PSDP).
The climate sector allocation is part of the PSDP and includes at least eight proposed projects aimed at strengthening climate resilience, promoting afforestation, supporting green growth, conserving biodiversity, and improving environmental monitoring systems across the country.
The federal minister Muhammad Aurangzeb stated that the federal government has earmarked 11 percent of its development budget and 1 percent of its current budget for climate-responsive initiatives in the fiscal year 2026-27, according to budget documents.
The budget also reveals that at least 44 percent of government subsidies are considered climate-responsive, either directly or indirectly, indicating a growing integration of climate considerations into public spending.
The budget documents stated that the Finance Division has developed an artificial intelligence (AI)-enabled digital infrastructure for climate budgeting. The system includes climate budget tracking, AI-assisted climate budget tagging, and digitized reporting mechanisms.
An integrated dashboard linked with the government’s SAP system will allow ministries, divisions, and departments to submit climate-related information through AI-supported digital forms and access analytical reports. Officials say the initiative will improve transparency, consistency, monitoring, and accessibility of climate budget information.
The government has also expanded climate budget tagging to include subsidies, grants, and climate-related revenues to provide a more comprehensive picture of climate-focused fiscal interventions and support evidence-based policymaking.
According to the budget document, green budgeting has been introduced as a key component of fiscal risk management. Federal ministries and departments will now be required to identify and report expenditures related to climate action, environmental protection, renewable energy, sustainable agriculture, biodiversity conservation, disaster preparedness, and other green economy initiatives.
In addition, disaster budget tagging has been introduced to improve tracking of disaster-related expenditures and strengthen fiscal preparedness against natural and climate-induced disasters.
The document further stated that Climate Budget Tagging (CBT) has now been institutionalized across the federal government. More than 5,000 cost centres have been mapped within the SAP system under climate adaptation, mitigation, and other climate-related categories through a consultative process involving relevant stakeholders.