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Climate-smart Public Financial Management Middle East and North Africa (MENA) Conference

February 26-29, 2024
Cairo, Egypt
Climate-smart  Public Financial Management MENA Conference

World Bank

The regional Climate Smart Public Financial Management (PFM) Conference will be an in-person event aimed at bringing together Middle East and North Africa (MENA) countries. Leading international experts and World Bank staff working on climate smart and green public financial management will facilitate the discussions and experience sharing. Sessions will focus on practical implementation of countries’ climate and green objectives in the budget process and other important components of the public financial management system.

The main objectives of the regional conference are:

1.     Help finance specialists from Ministries of Finance in MENA countries to solidify an understanding of climate risks and green growth opportunities across government and the broader public sector, integrate climate and green objectives in government core processes and decision-making, and mainstream climate and green objectives in public financial management.

2.     Facilitate the exchange of professional experience and knowledge transfer among PFM practitioners across MENA countries.

3.     Discuss the Ministries of Finance's priorities, plans for moving forward, and relevant international experience related to climate action and green growth.

4.     Strengthen government stakeholders' capacity to design and implement PFM reforms using the GovEnable participatory and iterative framework, aiming for concrete development results.

5.     Support the country level efforts and facilitate collaboration across countries in MENA on mitigation and adaptation to climate change and application of international and regional best practices in integrating climate change objectives in public financial management through joint activities aiming to address the common issues.

The Middle East and North Africa region faces multiple climate change challenges and tackling them will require from countries collaborative efforts across the whole of public sector supported by effective management of public finances. Key climate change challenges in the MENA region that have implications for public finance and call for the need to scale up by crowding in private sector and concessional financing include:

  • Water Scarcity: The MENA region is one of the most water-stressed areas in the world. It already faces water scarcity due to limited freshwater resources, population growth, and agricultural demands. Climate change exacerbates this problem by altering rainfall patterns and accelerating evaporation, leading to decreased water availability and increased competition for water resources.
  • Rising Temperatures: The MENA region experiences some of the highest temperatures globally, and climate change is expected to lead to further temperature increases. Extreme heat events can have severe impacts on human health, agriculture, and ecosystems, exacerbating existing vulnerabilities in the region.
  • Sea-Level Rise: The MENA region has an extensive coastline, and many coastal cities and communities are vulnerable to rising sea levels. Sea-level rise can lead to coastal erosion, saltwater intrusion into freshwater sources, and increased risks of flooding and storm surges, threatening livelihoods and infrastructure.
  • Desertification and Land Degradation: Climate change contributes to desertification and land degradation in the region, which negatively impacts agriculture and food security. Prolonged droughts and increasing temperatures can result in the expansion of arid areas, making land less suitable for cultivation.
  • Energy Demands and Emissions: High temperatures drive up energy demands for cooling, which can strain electricity grids. The region's heavy reliance on fossil fuels for energy production also contributes to greenhouse gas emissions, further aggravating global climate change.
  • Agriculture and Food Security: Climate change affects agricultural productivity and food security in the MENA region. Unpredictable rainfall patterns, increased droughts, and water scarcity can lead to crop failures and decreased agricultural yields.
  • Biodiversity Loss: Climate change poses a threat to the region's unique biodiversity and ecosystems. It can disrupt natural habitats, alter migration patterns of animals, and put various plant and animal species at risk of extinction.
  • Human Displacement and Migration: Climate-induced environmental changes, such as water scarcity and agricultural disruptions, can contribute to human displacement and migration within and across borders, leading to social and political challenges.

These challenges require urgent attention and concerted efforts to ensure sustainable development and mitigate the adverse effects of climate change. Advancement of climate smart and green policies is largely dependent on effective public institutions, particularly public finance, and management systems. Ministries of Finance in MENA countries play a crucial role in addressing these issues. By integrating climate considerations into fiscal policies, economic planning, and international cooperation, Ministries of Finance can drive the transition to low-carbon, climate-resilient economies, ultimately contributing to a more sustainable future for the region.

The conference is based on Helsinki Principles adopted by more than 70 countries- members of the Coalition of Finance Ministers for Climate Action.

         Principle 1                 

Align our policies and practices with the Paris Agreement commitments 

 

Principle 2

Share our experience and expertise with each other in order to provide mutual encouragement and promote collective understanding of policies and practices for climate action 

 

Principle 3

Work towards measures that result in effective carbon pricing 

 

Principle 4

Take climate change into account in macroeconomic policy, fiscal planning, budgeting, public investment management, and procurement practices

 

Principle 5

Mobilize private sources of climate finance by facilitating investments and the development of a financial sector which support climate mitigation and adaptation

 

Principle 6Engage actively in the domestic preparation and implementation of Nationally Determined Contributions (NDCs) submitted under the Paris Agreement  

Ministries of Finance cannot act alone and should seek to promote a collaborative approach. Climate action is a story of structural transformation, investment, and innovation across all sectors. This demands strong cross-agency collaboration and integrating climate action into the decision-making of all government departments. While Ministries of Finance play a key role, Heads of State, Ministries of Planning, Environment, Energy, Transport, and many others have an equally critical part to play – and many ministries have been acting on climate for decades. Finance Ministries need to match this effort and enable and support the climate leadership of other actors, including through national budgets. 

The budget cycle is an essential tool for the government to support the coordination and implementation of climate action. Understanding and agreement on what climate action is needed and how and why it may be obstructed will create a platform to effectively drive climate action through the PFM system.

The conference agenda will follow the budget cycle across five stages to consider key PFM elements that impact climate action, and possible functional change that might be required to bolster the PFM system for climate impact. At each point, the critical questions for policy makers to ask are HOW to make the PFM system effective in facilitating climate action. The answers will vary depending on national context and will benefit greatly from consultation among stakeholders inside and outside of government. The conference agenda will address the five stages of the budget cycle (below) to identify where challenges for climate action may emerge and offer examples of possible impacts and functional change required to address the challenge. 

Five stages where Public Finance Management influences Climate Action
World Bank

To make the conference useful and practical, participants are invited to share on the status of climate action in their country highlighting the following:

• Is there a Climate Strategy and Action Plan? What are the main pillars of the strategy and targeted goals within 5 years?

• Is there a Climate Change Coordination Entity? What is the scope of its role?

• Work at the Ministry of Finance regarding integration of climate considerations in fiscal policies and the budget process.