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Working paper: Budgeting for NDC action – Initial lessons from climate-vulnerable countries

This working paper addresses the following question: are climate change-related expenditures starting to appear in national budgets to secure the early implementation of countries’ Nationally Determined Contributions (NDCs)? It examines the evidence of resourcing NDC policies and actions in four sub- Saharan African countries – Ethiopia, Ghana, Kenya and Uganda – that are known to be vulnerable to the impacts of climate change. These are all non-Annex I Parties to the United Nations Framework Convention on Climate Change (UNFCCC).

The paper first examines the level of spending that passes through the countries’ national budgets for those ministries that play a leadership role in the sectors considered strategic to implementing the NDCs. Significant discrepancies exist between these ministry budget estimates and actual spending in the countries reviewed, raising questions over the potential for speedy implementation of new and additional climate change-related programmes.

How the national budget is constructed has a major bearing on the extent to which NDC-related actions can be identified as part of government spending. Budgetary reform in all four countries, including the recent introduction of programme-based budgeting, has raised the possibility of identifying such expenditures more readily than was previously possible.

A review of national budget spending in Ghana, Kenya and Uganda suggests limited resources are being allocated to NDC-related actions. In addition, many relevant national projects are heavily dependent on donor support. The implication of this is that the early implementation of NDCs in these climate-vulnerable countries will rely on significant international financial support, something already highlighted in the framing of the conditional elements of these countries’ NDCs.

Overall, the present and projected levels of public expenditure suggest that achieving the levels of spending implied in the first NDCs will be very challenging.

Policy recommendations

  1. Actions by a small number of ministries can advance NDC implementation in the four countries reviewed. Where this is the case, efforts to strengthen these ministries’ budget planning and reporting systems should be considered an integral part of early NDC implementation.
  2. For monitoring and reporting purposes, greater prominence should be given to end-of-year actual expenditure reports than start-of-year budget estimates. There is a need to better understand the national budget system through which public funds flow in support of NDC implementation, particularly with regard to the widespread discrepancy between budget projections and actual spending.
  3. Other non-Annex I countries should consider developing national climate change budgets, following the experience of the Governments of Ghana and Kenya, to help identify where relevant NDC spending is taking place and where strategic gaps in spending remain.
  4. The national budget could be used as a tool to assist international reporting to the UNFCCC. The scope for national budgetary systems to provide information on international support received should be considered as part of the ongoing discussions over the enhanced transparency framework of the Paris Agreement.