Staff Climate Notes

Climate-Sensitive Management of Public Finances—"Green PFM”

By Fabien Gonguet, Claude P Wendling, Bryn Battersby

August 11, 2021

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Fabien Gonguet, Claude P Wendling, and Bryn Battersby. "Climate-Sensitive Management of Public Finances—"Green PFM”", Staff Climate Notes 2021, 002 (2021), accessed December 21, 2024, https://doi.org/10.5089/9781513583044.066

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Summary

Public financial management (PFM) consists of all the government’s institutional arrangements in place to facilitate the implementation of fiscal policies. In response to the growing urgency to fight climate change, “green PFM” aims at adapting existing PFM practices to support climate-sensitive policies. With the cross-cutting nature of climate change and wider environmental concerns, green PFM can be a key enabler of an integrated government strategy to combat climate change. This note outlines a framework for green PFM, emphasizing the need for an approach combining various entry points within, across, and beyond the budget cycle. This includes components such as fiscal transparency and external oversight, and coordination with state-owned enterprises and subnational governments. The note also identifies principles for effective implementation of a green PFM strategy, among which the need for a strong stewardship located within the ministry of finance is paramount.

Subject: Budget planning and preparation, Climate change, Climate finance, Climate policy, Environment, Public financial management (PFM)

Keywords: Budget planning and preparation, Climate change, Climate change adaptation, Climate change mitigation, Climate finance, Climate policy, Global, Green budgeting, Green public financial management, IMF staff Climate note, IMF staff Climate Note 2021\/002, Mainstreaming, Management of public finances, Public financial management

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