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2.2.1. Background to greening budget support [

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Budget support operations provide assistance to implement either national sustainable development policies (in the form of general budget support, under either SDG contracts or state and resilience building contracts – SRBC) or a sector strategy (in the form of sector reform performance contracts - SRPC). They foster ownership, support policy reforms, focus on results, build capacities and are the anchor for policy dialogue. The funds are transferred to the national treasury and these are managed according to national financial management systems. Thus, budget support also offers unique opportunities for environmental and climate change integration in national development and economic governance or in specific sectors, starting with the greening of the country’s policies, indicator frameworks, fiscal policies, public finance management, and domestic revenue mobilisation systems.

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Budget support in a context of fragility

When budget support focuses on specific sector policies and reforms, it focuses on creating the conditions for sustainable growth at sector level. Typical greening entry points are developed in the section on the analysis of budget support criteria under a green perspective (below).

In a context of fragility, general budget support is provided under a state and resilience building contract (SRBC). In this context the entry points developed in the analysis of budget support criteria remain valid, and additional entry points may include:

  • Addressing the structural causes of fragility from a governance and environmental/climate change point of view. Climate change, biodiversity loss and environmental degradation can be drivers of fragility or conflict, and, in turn, this makes it more difficult to adapt to climate change and cope with the impacts of environmental degradation and biodiversity loss.
  • The above implies identifying the links between fragility, conflict, scarcity of resources and conditions of access to these resources. Entry points should be identified for resilience, peace building and conflict prevention e.g. through the implementation of integrated water resource management, the support to an inclusive share of maritime resources, or by encouraging measures reducing pressure on productive land. Furthermore, fragility and energy poverty are also closely connected. Scaling access to clean energy and managing an energy transition can be truly transformative for communities in fragile or conflict-affected contexts.
  • Linking with disaster risk reduction e.g. through the promotion of eco-DRR practices, favouring environmentally regenerative solutions to enhance resilience, including improved adaptation to climate change, build stability and provide a range of economic and social benefits. Crises and disasters also offer opportunities to ‘build back better’ focusing on environmental sustainability.
  • Identifying entry points and, to the extent possible, quick gains to foster the resilience of the economy and country systems, to help them cope with exogenous or domestic shocks, e.g. due to more frequent and impactful extreme weather events.

 

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References

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[121] The Budget Support Guidelines provide fuller explanations on budget support processes.

[1] The full criteria review includes policy support to the overall objectives of poverty eradication and inequality reduction, and sustainable and inclusive growth and job creation, the consolidation of democracies and peaceful societies, and the promotion of gender equality (Budget Support Guidelines).

[1] In the case of environmental or climate action, results may only be measurable in the medium term, sometimes after the implementation period. Also, the availability of some environmental or climate information (e.g. forest inventory, total national GHG emissions) may not be suitable to budget support timelines, which usually reviews progress on an annual basis. This calls for realism on which information should be required when formulating performance indicators.


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2.1. Greening and the intervention cycle7. Greening evaluation

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2.3. Greening investments2.2. Main entry points in greening budget support operations