{"id":5904,"date":"2025-09-16T09:57:57","date_gmt":"2025-09-16T04:57:57","guid":{"rendered":"https:\/\/pkfin.kotenterprises.dev\/?p=5904"},"modified":"2025-09-16T09:57:57","modified_gmt":"2025-09-16T04:57:57","slug":"pakistan-launches-125m-climate-risk-fund-to-protect-small-farmers-and-microfinance-sector-from-flood-shocks","status":"publish","type":"post","link":"https:\/\/pkfin.kotenterprises.dev\/?p=5904","title":{"rendered":"Pakistan Launches $125m Climate Risk Fund to Protect Small Farmers and Microfinance Sector from Flood Shocks"},"content":{"rendered":"

KARACHI:<\/strong> The federal government has established the Climate Risk Fund I (CRF-I)<\/strong> under the World Bank\u2013funded Resilient and Accessible Microfinance (RAM) Project<\/strong>, with financing of $125 million<\/strong>, to strengthen climate resilience in the agriculture sector and safeguard the country\u2019s microfinance industry from flood-induced shocks.<\/p>\n

The State Bank of Pakistan (SBP)<\/strong><\/a> will manage the Fund under a trust created by the government, aimed at enhancing the resilience of microfinance providers (MFPs) and their clients in flood-prone areas.<\/p>\n

Pakistan, ranked among the world\u2019s most climate-vulnerable countries, has faced repeated climate disasters in recent years. The 2022 floods, which devastated rural livelihoods, exposed the fragility of the agriculture and microfinance sectors, triggering loan defaults, liquidity shortages, and slowing down sectoral growth.<\/p>\n

The CRF-I<\/strong> seeks to reverse these risks by promoting climate-resilient farming, ensuring liquidity support for small farmers, and preserving the asset quality of MFPs. It also envisions transferring part of the economic costs of extreme flood events outside Pakistan through risk-based deployment of international reinsurance.<\/p>\n

Two Facilities Under CRF-I<\/h2>\n

The Fund will provide financing to eligible MFPs through two dedicated facilities:<\/p>\n

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    Innovative Agriculture Liquidity (IAL) Facility:<\/strong> This will enable MFPs to offer agricultural loans bundled with agri-tech services, encouraging farmers to adopt climate-resilient crops and modern cropping techniques to boost productivity and withstand climate shocks.<\/p>\n<\/li>\n

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    Contingent Liquidity Facility (CLF):<\/strong> To be activated following a flooding event, this facility will provide MFPs with liquidity to support borrowers in flood-hit areas. This will allow affected farmers to restructure or top up their loans, access fresh financing, and continue income-generating activities while helping MFPs preserve balance sheets during climate disruptions.<\/p>\n<\/li>\n<\/ul>\n

    According to the SBP, the CRF-I is designed to support climate adaptation, recovery, and financial inclusion<\/strong>, particularly for small, subsistence, and landless farmers who are most exposed to climate risks.<\/p>\n

    The central bank has also issued detailed rules for CRF-I<\/strong>, along with Policy and Procedures for Environmental and Social Management Systems (ESMS)<\/strong>. Eligible microfinance providers have been invited to apply for allocations under the Fund by submitting applications with supporting documents no later than September 30, 2025<\/strong>, to the CRF-I Secretariat at SBP\u2019s Programs Management Division, Agricultural Credit & Financial Inclusion Department.<\/p>\n","protected":false},"excerpt":{"rendered":"

    KARACHI: The federal government has established the Climate Risk Fund I (CRF-I) under the World Bank–funded Resilient and Accessible Microfinance (RAM) Project, with financing of $125 million, to strengthen climate resilience in the agriculture sector and safeguard the country’s microfinance industry from flood-induced shocks. The State Bank of Pakistan (SBP) will manage the Fund under […]<\/p>\n","protected":false},"author":1,"featured_media":5905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[2],"tags":[],"class_list":["post","format-standard"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t