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KEYNOTE PAPER: The Integration of Climate Change into Budgeting and Finance

KEYNOTE PAPER: The Integration of Climate Change into Budgeting and Finance

Posted by: Institute of Public Finance
Category: Our Blog

Climate change, previously only considered an environmental and development challenge, is now widely acknowledged as a pressing fiscal concern. African governments are now committing to setting aside public resources to tackle climate-induced disasters such as droughts, floods and cyclones.

According to the Collaborative Africa Budget Reform Initiative (CABRI) paper, ‘‘…climate change is projected to cause an average annual loss of more than 3% of gross domestic product (GDP) for Africa between 2015 and 2050, with some countries forecasting even higher average losses.’’ 

The Inclusive Budgeting and Financing for Climate Change in Africa Programme (IBFCCA) aims to strengthen links between national climate change policy and domestic public finances, with the aim of promoting climate resilience.

The first IBFCCA Peer Exchange brings together officials from ministries of finance (MoFs) across Africa with an aim to facilitate collaboration on how best to integrate climate change into public financial management (PFM) systems. 

Some highlights of this keynote paper include; 

  • Climate change is unequivocally impacting the growth and public finances of African economies. 
  • Addressing climate change means adopting mainstreaming tools and approaches. Mitigation and adaptation can be best achieved by integrating climate change into regular public expenditure programmes. 
  • The climate budgeting literature suggests that budget processes do not adequately prioritise climate change. The Ministry of Finance must prioritise climate change adaptation/mitigation investments with a clear understanding that climate change is not a ‘Ministry of Environment issue’. 

This keynote paper was written by Stephanie Allan, with contributions from Kit Nicholson. Assistance with the background research for the country reviews was provided by, among other established professionals, the Institute of Public Finance Kenya’s Senior Fiscal Analyst Winnie Mageto under the guidance of the CEO James Muraguri. 

Read more on climate change integration into budgeting and finance here.