Piloting budget support for climate change
In an increasingly complex climate finance landscape, the GCCA is piloting the use of budget support as a delivery mechanism to enhance aid effectiveness.
With budget support, aid goes directly to the partner governments’ treasuries subject to agreed conditions. It is released to the countries in tranches as set eligibility criteria and targets have been reached. The objective is to fully support country agendas and systems, encouraging policy dialogue, political commitment, ownership and sustainability. Ultimately, climate change would be fully integrated into a country’s overall development.
The GCCA is using various forms of budget support. Climate change programmes in Lesotho, Mauritius, the Seychelles and the Solomon Islands – which aim to integrate climate change into overall poverty reduction and development efforts – are delivered through general budget support. The GCCA also makes use of sector budget support when a programme is meant to address climate change at the level of a whole sector, from policymaking to budgeting and implementation. Typically, the GCCA enhances the adaptation or mitigation components of existing sector programmes. In Guyana, GCCA sector level actions have focused on the implementation of the National Mangrove Management Action Plan. In other countries there are different focuses. In Samoa, it is the water sector; in Rwanda, land tenure; and in Bhutan, the natural resources sector.
The GCCA believes there is significant potential for increased use of budget support, as highlighted by the diagram below which shows the distribution of different aid modalities used to date. As climate change finance is expected to increase in the coming years, the use of budget support provides interesting prospects to improve the capacity of developing countries to absorb funds made available to support their adaptation and mitigation efforts. A move from project-specific to sector level support also leads to better climate risk management, and helps to ensure that climate change adaptation is integrated into a country’s overall development effort.