mover’ in this area. Several countries (e.g., Bangladesh) that have worked with UNDP on these tools have subsequently taken up leadership positions within the international climate finance community, in part based on the knowledge generated through the collaboration with UNDP. The first of these tools was the Climate Public Expenditure and Institutional Review, which was developed in 2011. At its core is a public expenditure review of climate-related public spending and involves the tagging of climate-relevant budget estimates. This information can be used to inform future public spending plans and to evaluate previous spending. As an early effort to broaden the scope of analysis beyond climate budget tagging, UNDP prepared a guidance note157 in 2017 to help strengthen the alignment between climate change policy and the national budget process. The guidance note describes a strategic, whole-of-government planning process that aims to improve the mobilization, management and targeting of climate finance. This body of analytical work has provided the foundation for the current UNDP offer in support of broader financial and planning processes. New work is being developed using tools from the previous action area, through the development of INFFs that focus on strengthening the links between the budget and national development planning. SDG budgeting has also provided UNDP with a skill set to engage with Governments on how to monitor the impact of COVID-19 on public spending, as the example from Armenia demonstrates (box 4).
BOX 4. The example of the Armenian Government’s Budget Circular for 2020 During the early stages of the COVID-19 pandemic in mid-2020, the Sustainable Finance Hub produced a quick guide on how public finance management could be adapted to respond to COVID-19 issues using budget tagging. This generic guidance was used in Armenia to support discussions between UNDP and the Ministry of Finance. This led to the Ministry’s issuance of a budget circular requiring all line ministries to tag projects related to COVID-19 recovery efforts, so that an aggregate picture of relevant spending could be compiled. The information has yet to be published and its impact discerned, but the guidance was taken up very quickly and adopted in the national budget reporting process as a first step to understand the level of public expenditure being directed at the pandemic recovery. Armenia is one of 30 countries for which UNDP is supporting budget tagging.
Leveraging sovereign bond markets Finding 10. UNDP has supported sovereign bond issues for the Sustainable Development Goals in a number of countries, an important area for the provision of new and additional financing for the Goals. However, the organization currently lacks a strategic focus for delivering at scale to meet the financing goals articulated in the Strategic Plan. As Governments seek to expand fiscal space, affordable access to bond markets could play an important role in SDG financing, as indicated in section 5. Given the size of the market, this is an area where UNDP could potentially leverage at least part of the $500 billion in private capital debt financing for the SDGs.
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UNDP Bangkok Regional Hub, ‘Hard Choices, Integrated Approaches: A Guidance Note on Climate Change Financing Frameworks’, undated.
CHAPTER 5. THE UNDP FINANCING TOOLKIT
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