Climate Change Finance & Public Financial Management

Photo Credit: Jovi Totorea

The Forum has been working with partners and Members to strengthen national public financial management (PFM) system and processes and advocacy for climate change indicators/considerations to complement the Public Expenditure and Financial Accountability (PEFA) framework. It also provides advice and support on country readiness for ‘direct access’ through  National Implementing Entity (NIE) accreditation to the Green Climate Fund (GCF) and Adaptation Fund (AF).

Outcomes

  • The Pacific Climate Change Finance Assessment Framework (PCCFAF) applied in 8 FICs was recognised internationally by the UNFCCC’s Standing Committee on Finance as global good practice for assessing the needs of developing countries.
  • Forum Economic Ministers’ approval in May 2019 for further work on a revised PFM approach, including the inclusion of climate finance in the PEFA Framework. To coordinate and facilitate the implementation of key Finance and Economic Ministerial Meeting decisions related to PFM and climate change finance, a Technical Working Group (TWG) on PFM and Climate Change Finance was established in 2020 which is co-chaired by the Pacific Financial Technical Assistance Centre (PFTAC) and PIFS. Currently, the TWG focuses on three workstreams:  (i) inclusion of climate change considerations into PEFA Framework.  This workstream includes a pilot of the new PEFA Climate Module which has just been completed in Samoa under the leadership of PFTAC; (ii) development of a Regional National Implementing Entity (NIE) Guideline for the Green Climate Fund and Adaptation Fund; and (iii) development of a Regional National Implementing Entity (NIE) Guideline for the Green Climate Fund and Adaptation Fund.
  • Securing 2021 FEMM’s endorsement to formalize advisory role of the TWG on PFM-Climate Finance.
  • Completion of a regional consolidated PFM issues matrix for eight FICs and approval of the PFM climate finance pager highlighting key reform areas to enhance accessibility.
  • Supported Ocean finance profiling for Tonga in collaboration with the Office of the Pacific Ocean Commissioner (OPOC) and the Forum Fisheries Agency (FFA).
  • Kiribati: A draft Treasury Operational Manual consolidating and outlining processes that encompass financial instructions, procedures and rules, was developed for the Ministry of Finance and Economic Development, based on the Public Finance Act. This is part of the Readiness Capacity Support provided to the Government of Kiribati following a joint-climate finance and disaster risk finance assessment.
  • Tuvalu: Support Ministry of Finance and Economic Development in strengthening its Internal Audit Unit (IAU). This was done by developing an Internal Audit risk framework as required by climate finance institutions, particularly the Green Climate Fund and the Adaptation Fund. This framework guides the operations of the IAU, in accordance with the International Standards for the Professional Practice of Internal Auditing, which will significantly bolster the Government’s internal controls. This also contributed towards the accreditation of the Ministry of Finance as a NIE for the Adaptation Fund in 2019.
  • Solomon Islands: The establishment of a Climate Finance Unit (CFU) within the Ministry of Finance and Treasury was a result of the scoping exercise supported by the CFRP Project. This Unit ensures effective coordination of all climate change finance activities across the government and facilitate the government’s intention to access the GCF and AF.
  • Successful implementation of the peer to peer learning where two senior officials from the Government of Tuvalu were hosted by Fiji’s Ministry of Economy for two weeks to enhance their capacities in internal audit and aid management.
  • Ongoing development of monthly Policy Briefs on various aspects of Resilience development financing. These Policy Briefs are distributed on monthly basis to FICs and can also be accessed here.

Activities:

  • A new PEFA Climate Module developed in 2020 was piloted and recently completed in Samoa under the leadership of PFTAC. This analyses the responsiveness of national PFM systems to climate change. According to the CEO of Samoa’s Ministry of Finance, the PEFA Climate Module has helped them to mainstream climate change into the budget process and also inform resource allocation. Similar initiative is planned for Fiji.
  • A Regional Guideline for the Green Climate Fund (GCF) is currently under development. This will assist FICs that are keen to seek National Implementing Entity (NIE) accreditation for direct access to the GCF.
  • Led the convening of two regional climate financing events – SIDS Access to Finance Dialogue which was co-facilitated with government of United Kingdome and Innovative Climate Finance Instruments Workshop (co-facilitated with ESCAP).
  • A study on Debt-for-Climate Swap is currently underway. The study is conducted by PIFS and United Nations Economic and Social Commission for Asia and the Pacific.
  • The Pacific Islands Forum (PIF) in partnership with the United Nations Development Programme (UNDP) and the UK Government hosted a Talanoa event, titled Climate Finance Effectiveness in the Pacific: Are we on the right track? on Thursday 9 September 2021. The dialogue explored whether the US$2.2 billion international climate finance received in the Pacific over the past decade has been effective in tackling the impacts of climate change and what measures could help to make it more impactful in the future. In addition to this dialogue, a discussion paper was developed which highlights some of the issues on climate finance effectiveness in the Pacific region.

Partners

Supported by the Pacific Financial Technical Assistance Centre (PFTAC) and members of the TWG on PFM and Climate Change Finance.

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