Some Thoughts From IMF on Green Budgeting Claude

Some Thoughts From IMF on Green Budgeting Claude Wendling Fiscal Affairs Department INTERNATIONAL MONETARY FUND

Rationale: Why Is Green Budgeting Important? Ø Because PFM practices can help achieve green / climate change commitments. Ø Because green budgeting practices are still scarce or non-existent in most countries. Ø Only 20% of OECD countries publish the environmental impact of individual budget measures (source: OECD, 2018). Ø Only 25% of countries publish quantitative information about environmental risks (source: Fiscal Transparency Evaluations up to 2020). Ø In the context of IMF CD work, still limited demand originating from our main interlocutors in Ministries of Finance on this topic. INTERNATIONAL MONETARY FUND 2

A Holistic Approach: the Budget Cycle INTERNATIONAL MONETARY FUND 3

A Holistic Approach: Green Budgeting Practices v Environmental targets and objectives v Green medium-term fiscal targets v Management of environmental fiscal risks v Long term fiscal sustainability v Ex ante climate assessments v Program / performance budgeting v Green budget circular v CSO/public participation v Green budget documentation INTERNATIONAL MONETARY FUND 4

A Holistic Approach: Green Budgeting Practices v Ex post climate impact evaluations v External audit v Independent climate watchdogs v Green tagging of expenditure v Classification systems v In-year monitoring and reporting v Ex post reporting on green outputs and outcomes INTERNATIONAL MONETARY FUND 5

Discussion. A few questions going forward • What are the critical capacity constraints for putting in place green budgeting, both in the Ministry of Finance and in line ministries ? • How to integrate green budgeting practices while keeping the centrality and the effectiveness of the budget process ? • Which green budgeting practices are more likely to make a difference in terms of actual decision- and policymaking, and not just serve as a tool for increased transparency ? INTERNATIONAL MONETARY FUND 6

Thank you! INTERNATIONAL MONETARY FUND