Macro-fiscal policy, economic strategy, forecasting and fiscal risk analysis

Assessing how climate change, nature loss and the transition affect growth and public finances, and incorporating these findings into economic strategy, macro-fiscal forecasts and fiscal risk analysis.

C1 · Leadership capability

C1a Strengthening the mandate of Ministries of Finance Connecting climate responsibilities with mandates for economic development, macroeconomic stability, and sound public finances. → C1b Developing organizational climate strategies Translating climate responsibilities into internal objectives and work programs. → C1c Formalizing governance structures & organizational set-up Assigning climate responsibilities and organizing internal coordination. →

C3 · Human and analytical capability

C3a Enhancing skills and expertise Building climate expertise through recruitment, training, peer learning, and collaboration with external specialists. → C3b Enhancing economic decision-making tools and data-driven analysis Using economic analysis to integrate climate into decision-making. →

F1 · Reforming economic strategy through shaping national development and climate plans

F1a Participating in the development and implementation of climate and related strategies How Ministries of Finance can support national climate and biodiversity strategies through economic analysis, fiscal policy, and finance. → F1a(i) Long-term low-emission development strategies (LT-LEDS) Assessing the economic and investment implications of long-term climate strategies and connecting them with nearer-term policy decisions to support growth and competitiveness. → F1a(ii) Nationally Determined Contributions (NDCs) Assessing the economic implications of national climate commitments and supporting implementation to make commitments affordable and deliverable. → F1a(iii) National Adaptation Plans (NAPs) Assessing adaptation priorities and financing needs and connecting them with development planning and the budget to protect livelihoods and economic activity. → F1a(iv) National Biodiversity Strategies and Action Plans (NBSAPs) Connecting national biodiversity priorities with economic planning, fiscal policy, and financing to sustain the natural assets that underpin economic activity. → F1b Greening national development and sector strategies Connecting climate objectives with national development and sector strategies. → F1c Shaping 21st century industrial and innovation strategies Contributing to industrial and innovation strategies that support low-carbon sectors, productivity, and employment. → F1d Developing investment strategies, including assessing investment needs Assessing climate investment needs, establishing priorities, and connecting investment plans with public and private sources of finance. →

F2 · Fiscal policy

F2a(i) Carbon taxes and pricing, subsidy reform, and frontiers in environmental taxation Designing carbon pricing, fossil fuel subsidy reforms, and new forms of environmental taxation. → F2a(iii) Combining instruments into coherent policy packages Assessing interactions between fiscal and regulatory measures and bringing them together in coherent climate policy packages. → F2b(i) Identifying alternative revenue streams to taxing fossil fuels Assessing exposure to declining fossil fuel revenues and developing alternative revenue sources as the economy changes. → F2b(ii) Managing the fiscal risks of cascading contingent liabilities Identifying and managing climate risks that create pressures on public finances to help protect fiscal stability and preserve budget flexibility. → F2d Greening public investment management Incorporating emissions reduction and climate resilience into the appraisal, selection, and management of public investment. →

F3 · Financing the transition

F3a(i) Broadening the tax base for capital investment in sustainable infrastructure Expanding domestic revenue through tax reform to support investment in sustainable infrastructure. → F3b(ii) Greening sovereign wealth funds and state-owned enterprises Bringing climate objectives and risk management into oversight of sovereign wealth funds and state-owned enterprises. → F3b(iii) Greening central banks and fiscal and monetary policy coordination How Ministries of Finance and central banks can coordinate on climate risks and the transition. → F3c(i) Using financial sector policy to mobilize private capital for the transition Working with regulators and financial institutions on climate risk, disclosure, and market frameworks that support investment in the transition. → F3d Providing disaster risk finance and insurance for all Arranging financing before disasters occur to support timely response and recovery, protect vulnerable households and businesses, and reduce pressure on public finances. → F3e(ii) Accessing international carbon markets Assessing international carbon market opportunities and their implications for financing, public revenues, and national climate commitments. →

Budget execution, treasury, accounting and reporting

Explore ways to manage and track climate-related spending after the budget is approved, compare actual expenditure with allocations, and strengthen accounting and reporting.

Budget preparation and planning

Explore ways to integrate climate priorities into budget preparation, assess spending proposals and plan expenditure over the medium term.

Debt and cash management

Explore ways to manage and track climate-related spending after the budget is approved, compare actual expenditure with allocations, and strengthen accounting and reporting.

Financial sector policy and financial markets

Explore how financial sector policy can mobilise private capital for the transition through green taxonomies, climate-related disclosure, engagement with regulators and financial institutions, and financing instruments that support investment.

International and development finance cooperation

Explore ways to access and coordinate international climate finance, work with development partners and multilateral development banks, and build country platforms that align financing with national investment priorities.

Leadership, coordination and institutional development

Explore ways to strengthen the Ministry’s mandate and strategy for climate action, clarify responsibilities, build governance structures and staff capabilities, and coordinate across government and with external stakeholders.

Public investment and procurement

Explore how climate risks and transition opportunities affect growth, revenues and expenditure, and how forecasts, scenarios and modelling can inform economic strategy and fiscal planning.

State assets, state-owned enterprises and subnational finance

Explore ways to integrate climate priorities into the oversight of state assets, sovereign wealth funds and state-owned enterprises, manage their climate-related risks, and support financing for climate action by subnational governments.

Tax, customs and revenue policy

Explore carbon pricing, subsidy reform and fiscal incentives, alongside climate-related customs measures and options to maintain revenues as fossil fuel receipts decline.