Transcript Strategy formulation and climate change prioritizing areas for climate action and funding, linkages to development priorities including poverty reduction Session 6

Strategy formulation
and climate change
prioritizing areas for climate action and funding, linkages to
development priorities including poverty reduction
Session 6
Inclusive Climate Change Planning
and Finance in Bangladesh
- A Key development strategy towards poverty reduction
Rafique Ahmed Siddique
Aid Effectiveness Unit, ERD
Acknowledgement: Poverty, Environment and Climate Mainstreaming (PECM) Project,
General Economics Division, Planning Commission
Climate Change and Current Spent
 Government of Bangladesh spends 6% to 7% of its annual combined
budget on climate sensitive activity
 Annual sum of US$1bn or just over 1% of GDP
 Climate spend increased in absolute terms over last two years, but
slight decline in relative terms
 97% spent on adaptation
 Over the period 2009/10 to 2011/12 the funding of climate sensitive
budgets has been of the order of 77% from domestic resources and 23%
from foreign donor resources
 Loan funding increased from 58% to 82% of foreign funds between
2009/10 and 2011/12
 Climate Trust funds very small share of total climate expenditure
 Social protection for climate vulnerable very large share of finance, but
much less attention in the climate policy and programme.
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Key Findings: Funding of Climate Actions
Funding of Climate Actions
100%
90%
80%
70%
60%
Donor – Grants
Donor – Loans
50%
GoB – ADP
40%
GoB – Non Development
30%
20%
10%
0%
2009/10 %
2010/11 %
2011/12 %
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Key Findings: Climate institutions : types & their activities
 Complexity
o
o
o
o
Financial (5 Mechanisms)
Institutional (37 Ministries, Plus LG, Plus NGOs, Plus Others)
Policy (Multi layered, Multi sectoral, Unbalanced Influences)
Local Governance Structure (District Administration, Elected
Authorities)
 Urgent need for Co-ordination and Better Organisation
 Existing Architecture should be used to Address Climate and Climate
Change on an Integrated Basis
o
o
o
o
o
Budgets
Policies
Institutions
Programmes
Projects
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The Push!
 BCCSAP mentions that a US$ 500 million programme will need to be
initiated in year 1 and 2 for immediate actions, such as strengthening
disaster management, research and knowledge management programs.
 First five year’s fund of about US$5 billion will be required
 BCCSAP identifies 44 programs under its six thematic pillars
 The programs identified in 2009 need further revision. Costing of these
programs is yet to be done
 All these requires a robust whole of GoB Climate Fiscal Framework in
Bangladesh
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CLIMATE FISCAL FRAMEWORK
THE PULL
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Towards a Comprehensive CFF
 Fiscal policy has a critical role to play in adaptation and mitigation of
greenhouse gas emissions and raising revenues for climate finance,
fiscal consolidation, and other purposes.
 The climate fiscal policy (CFP) framework consists of a number of
principles upon which the policy is designed.
 The framework is a tool to ensure that CFP is transparent and
sustainable in the long run. It is a prerequisite for achieving the policy
objectives of climate change policy.
 The budgetary framework is a key element of CFP. It is used to create
better conditions for achieving the overall objectives of CFP without
adversely affecting public finances.
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Towards a Comprehensive CFF (Contd.)
 Mitigating and adapting to climate change requires good
macroeconomic management, fiscal policy plans, revenue raising
alternatives, insurance markets, and long term investment options.
 The Ministry of Finance needs to manage these challenges by adopting
budget priorities, pricing policies, and financial market rules. To this
end, country needs to formulate a comprehensive Climate Fiscal
Framework (CFF) to study and map out fiscal issues for climate change.
 The CFF provides an account of fiscal developments and resource
estimates for the short, medium, and long term climate expenditure;
and allows to analyze how CC related expenditure is being integrated
into national budgetary processes.
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What is CFF
 CFF may be viewed as a framework which will ensure that external
and internal finances are used most effectively to address climate
change.
o To achieve such a framework Bangladesh is going to
(i) identify their existing expenditures and modalities for
delivering climate related finance
(ii) identify additional expenditure requirements drawing from
action plan such as BCCSAP and other sources
(iii) identify financing gaps and preferred modalities for
delivering further sources of public investment (external &
domestic), and
(iv) create an enabling environment for private financial
flows . Will this include both on and off budget expenditures?
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CFF (Contd.)
 CFF will focus on following features:
o CFF is going to suggest policy tool(s) that will mainstream climate change issues in
MTBF and the Planning process in line with the guidelines laid out in the BCCSAP
o CFF will suggest change in audit related policy and procedures as to incorporate
climate change issues in the audit regime
o CFF is going to develop a framework for tracking climate change related
expenditures like the existing gender-sensitive expenditures
 Focus on strengthening the Annual Development Plan (ADP) and Medium term
Budgetary Framework (MTBF) processes as a means to balance and co-ordinate
policy.
 Budget Management Committees of line ministries should be strengthened
with expertise in the area of CC activities.
 Focus on balancing sector policies with overall climate strategy
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CFF (Contd.)
 Existing institutional architecture for development strengthened to plan, finance
and implement CC programmes.
 Institutions should emphasize vulnerability and climate hot-spots.
 Parliamentary Standing Committee legally empowered to oversee activities
related to Climate Change
 Performance Audit of Climate Finance by Auditor General Office.
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Key Dimensions of CFF in Bangladesh
Demand and supply side issues of the CFF
 Demand side issues of the CFF
o Existing climate expenditure and modalities
o Climate Change Expenditure Tracking Framework
o Projecting the future cost of the climate related activities
o Linking climate change policy (BCCSAP and others) with planning (SFYP and ADP)
and budgeting (MTBF)
 Supply side issues of the CFF
o Analyze international financing received and obstacles of access to the existing
international climate funds and recommendation for their remedy
o National Climate fiscal policy options – taxes on natural resources extraction, user
charges/fees and subsidy reforms and environment related taxes
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Climate investment- banking sectors related issues
 Institutional and capacity development related issues
o Establishment of a Climate Change Financial Unit (at FD)
o Suggesting outline of establishment of a climate finance information hub)
 Audit and Oversight Issues
o Suggested Changes in audit related policy
o Climate expenditure and Parliamentary oversight
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Thank You