Overview of IBFCR
The overarching philosophy of the project is to strengthen, build and promote the use of country systems to identify sources of climate finance (domestic and international) and manage climate response in Bangladesh in a transparent and effective way.
The CPEIR study was part of a broader effort by the Government of Bangladesh (GoB), supported by UNDP, to strengthen the capacity of national and local level institutions to manage the increasing flow of climate finance, which ultimately helped the development of the CFF by the FD. The CFF was necessary for Bangladesh to make the country system ready to generate domestic sources of climate finance and access international climate finance, and utilize the finances with highest transparency and accountability.
The introduction of a climate dimension in tracking budgets and expenditure will be a very helpful development to ensure that climate sensitive activity is recognised within the performance accountability architecture and the MTBF. The CFF will take into account the potential role, risks and responsibilities of the institutions involved in climate response (including the private sector). Hence, the next important step will be to regularly update the CFF on the basis of detailed and estimated climate investments.
The focus of IBFCR project will be on the implementation of this national CFF, which will provide an incentive framework for climate change adaptation and mitigation. In doing so, it will also strengthen the PFM system for climate finance, particularly with regards to accountability and transparency, as well as to the flow of finances to line ministries, and to the local level. This will include activities to integrate climate into the medium term budget framework, introduce climate budget coding, bring existing climate funds on budget, and budget support for climate finance.
Scope of the Project
In order to respond to these overarching goals the proposed project will focus on:
- All climate related sources of funds and potential sources of funds identified and recognised as transparently as possible in MTBF and National Budget
- Developing the interface between National and Local CFFs
- Refinement of the Long Term Climate Fiscal Framework to include taxation, incentive-based fiscal instruments, sources and deployment of funds, and its financial management strategy.
- Explicitly recognising climate dimension in Ministry Budget Frameworks (MBF) and Medium Term Strategic Business Plan (MTSBP) of top five climate spending ministries.
- Updating pricing, taxation and subsidy policies for coherence with BCCSAP objectives.
- Fostering a partnership approach amongst FD, Economic Relations Division (ERD), GED, Programming Division, and Implementation Monitoring and Evaluation Division (IMED).
- Identifying long term costs of climate sensitive works (and prioritized by sector) for inclusion on an annualized basis in MTBF.
- Establishing climate policy-based linkage between FD and Programming Division’s ‘Classification System’.
- Introducing options for programme based approaches and budget support for climate finance.
- Strengthening accountability of climate finance at Parliamentary level.
- Supporting Office of Comptroller and Auditor General (OCAG) to conduct Climate Finance Performance Audit
- Establishing a national CFF implementation committee and supporting it to promote inter-ministerial coordination led by FD.
- Exchange programme with relevant climate change agencies of different countries.
Objectives of the Project:
The overall objective of this project is to rationalize the PFM of climate finance and introduce a climate policy based focus to planning, budgeting and performance management of climate finance by implementing the GoB’s CFF. The four specific objectives of this project are to:
A. Foster a sustainable basis for identifying, maximizing and managing sources and application of funds for financing climate resilient actions.
B. Develop climate related capacity and expertise within Finance Division and develop stronger relationships and collaborative partnerships with other major climate stakeholders to maximize benefits of national and international climate finance.
C. Enhance the recognition of climate policy and national strategy in the key Finance Division led PFM processes including Budget, Medium Term Budget Framework (MTBF) and attendant Performance Management Systems, Ministry Budget Frameworks (MBF) and the Medium Term Macroeconomic Policy Statement (MTMPS).
D. Develop greater cohesion between Finance Division led PFM initiatives and the Annual Development Programme (ADP) in respect of the recognition of climate issues as an interest of national priority.