Govt plans climate budget tagging

Islamabad plans climate budget tagging and subsidies in 2025

The government of Pakistan is set to implement climate budget tagging in the next federal budget of 2025 to monitor the allocation of public funds for climate activities and improve transparency of the subsidies system.   It is expected that this new framework will tag each significant budget item—like a subsidy—whether it relates to climate adaptation, climate mitigation or is irrelevant to climate issues. The plan is to align public spending with Pakistan’s climate objectives and improve green economic planning.

Subsidies are likely to be tagged across energy, agriculture, and transport. By tagging or identifying the climate relevance of this expenditure, it is expected that, in time, the government will eliminate this environmentally unfriendly spending and promote more sustainable investments.

The Ministry of Finance and the Ministry of Climate Change are both working jointly. They understand that this initiative aligns with international climate finance approaches and can assist Pakistan in accessing green funding through international partner funding opportunities.

Experts described climate budget tagging as an important step for Pakistan with the increase in the serious climate crisis that the country is facing and the recent serious floods, droughts, and heatwaves because it helps with accountability and efficiency in budgeting processes.