USE OF COUNTRY SYSTEMS TO MANAGE CLIMATE CHANGE PAUL STEELE, UNDP

Overview County systems Climate expenditure/finance Why use country systems to manage climate finance How to use country systems to manage climate finance Conclusions

Country Systems for Climate Change: It’s a plumbing job Integrate climate into planning Integrate climate to budgets

Country systems: plumbing Planning Policy coordination and implementation Budgeting & financial management Procurement Monitoring and evaluation

Planning Budget Treasury ProcurementAccounting Auditing Reporting Public Finance Finance Civil Society Private Sector Coherence Predictability Transparency Gender Equity Parliament

Climate expenditure/finance Climate expenditure is significant (3-15% of total government expenditure ) Domestic expenditures important Cross ministerial expenditure (eg Agriculture, Infrastructure, Local Gov, Social protection, ) International climate finance fragmented and often outside country systems: donor trust funds, GEF, Special Climate Fund, Adaptation Fund Green Climate Fund intended to consolidate Leveraging private finance is key

Climate finance and country systems: Why? Advantages of using country systems – Country ownership – Transformational change: heart of economic policy – Mainstreaming across sector and subnational budgets – Scaling up and lower transaction costs But challenges of corruption, harder to monitor, competing interests – political economy?

Climate finance and country systems: How? Institutional reforms Planning Budget execution and implementation Accountability and Monitoring

Planning Budget Treasury ProcurementAccounting Auditing Reporting Public Climate Finance Climate Finance Civil Society Private Sector Coherence Predictability Transparency Gender Equity Parliament e.g. Climate policy in Annual Plan e.g. Climate Budget marking e.g. Climate Key perfor- mance indicators e.g. Audit climate expenditure

Country systems and climate finance: Institutional reforms Budget process: public expenditures and incentivizing private finance Promote climate finance units in Ministry of Finance(Indonesia, India) Inter-ministry climate finance groups (Bangladesh, Thailand, Cambodia) Local government needs climate expertise

Country systems: Planning and Budget execution & implementation Climate Fiscal Framework (Bangladesh) Climate impacts of capital budget assessed (VietNam) Climate strategy costed for budget (Cambodia) Local climate expenditure targets (Nepal) Public financial management for managing climate finance (Bangladesh)

Country systems: Accountability and monitoring Climate included in performance based budgeting (Bangladesh) Assessing climate expenditure quality ie cost-effectiveness (Indonesia) Budget climate coding/tracking (US, EC, Nepal, Indonesia) Distributional impacts of climate finance (Bangladesh)

Conclusions Country systems are the plumbing Climate finance – domestic is significant, international fragmented and often outside county systems Climate finance needs to flow through these country systems But there are challenges that need to be overcome – need to understand the politic economy