Governance Challenge of
Climate Change Finance:
the Political Economy of Bangladesh
Dr. Krishna Gayen, Joint Secretary, Finance Division, Ministry of Finance,
Government of Bangladesh
1 December 2013
Climate Finance Week
S
Political Economy Questions
S Climate Change: Is it an environmental issue? Or a Development
issue?
S Role Controversies: Policy, Planning, Institutional, finance, technical
and implementation role?
S Climate Finance: Different Modalities/ or Country System?
Issue Controversy
S In talks, many people (including expert) define climate change as a
development issue, but in reality there is a tendency to treat the issue
of climate risk as a very technical issue.
S The segregation of scientific and management aspects often
undermined rather overlapped.
S The ‘technical’ viewpoint is dominating the ‘development’
viewpoint.
S Generally, the issue is recognized as ‘development’ issue but the
main development actors are yet to be included in the overall
platform of climate change in Bangladesh.
Technical
• Generally derived from the “Environment”,
“Geography”, “Water Resource” and “Flood”
Practice areas
• See the problem of ‘climate change’ mostly from
‘hazard’ dimension, and mostly focused on the
“cause” and “impacts” dimensions of the climate
change.
• Strongly believe that the issue is very ‘technical’ in
nature and most people do not understand.
• Generally undermine the “social” and “economic”
dimensions.
• Claim that “climate change” is the issue they
established internationally and nationally as a
critical issue. Therefore, claim the leadership of the
climate change programme.
• Heavily focused on the “environment’ ministry
role
Development
• Generally derived from the “Development”,
“Economics”, “Social Science”, “Disaster
Management”, and “Poverty and Livelihood”
practice areas
• See the problem of “climate change” mostly from
“vulnerability’ dimension and generally more
focused on “vulnerability reduction” and
“management aspects”.
• Believe that “climate change’ is largely an issue
of ‘risk’ factors in development gain. This is not
very tough to deal.
• Do not value the “technical” dimensions much
due to difficulties of the lexicon in the
development vocabulary.
• Claim that ‘climate change’ is one of the aspect
of ‘development challenges’. Need to deal
integrated way and claim leadership of climate
programme.
• Heavily focus on the role of “planning” and
finance.
Governmental Climate Finance
S The government’s two climate funding mechanisms are:
S Bangladesh Climate Change Trust Fund (BCCTF) – allocations
from the national non-development budget.
S
Created to initiate immediate action on BCCSAP rather than wait for
international aid.
S Bangladesh Climate Change Resilience Fund (BCCRF) – funds
principally by DFID, Denmark, Sweden, the EU and Switzerland.
S
Created in response to incoming international aid.
Both funds incorporate all six themes in the BCCSAP.
Key Actors in
Climate Change Activity
Role Controversy
S At present, Policy, Planning, Coordination, Finance roles are
being performed by the Ministry of Environment and Forest.
S Implementation role is played by sectoral ministries.
S The role of Ministry of Planning and Ministry of Finance is
gradually becoming mature.
S The role of CSOs and Community are marginalized
S The donors role are heavy in shaping climate agenda in
Bangladesh.
Finance Dilemma?
S Using Country System vs. Special arrangement?
S Gradual pressure to use country system for climate finance.
S Standalone finance? Or Integrated Budget Support?
S Centralized or Decentralized?
S Big dilemma how to channel CC finance to LG level?
Monitoring and Auditing of
Climate Funds
S BCCTF
S Project budgets are submitted by grant-seeking agencies and finalized with
the assistance of the Climate Change Unit, on the basis of the
government’s procurement and sectoral implementation plans.
S The office of the Controller and Auditor General of Bangladesh audits
“on-budget” activities. The Board of Trustees has the authority to assign
an independent audit of projects.
S BCCRF
S Project grants are approved for government agencies accroding to a legal
Grant Agreement with the WB as Trustee.
S WB will provide the donors with an annual report on the financial and
physical progress of activities, and an annual single audit.
BCCTF vs. BCCRF
BCCTF
BCCRF
Development Oriented?
YES
YES
Why Standalone?
Fast Track
Fiduciary Risk
Who manage?
MoEF (CCT)
MoEF (WB)
Who Implement?
All Ministries
All Ministries
(Water, Forest, LGED,
Agriculture)
(Water, Forest, LGED)
Types/Nature
Grant
Grant
Amount
USD 350m
178m
Source of Fund
GoB’s own fund
Multi-donor trust fund
How different from current ADP projects? Almost Similar
Almost Similar
Follow Country Planning System?
No
No
Follow Country Finance System?
No
No
No
No
Lack of a sound and integrated financing
system.
2.
Rather than a projectized approach, climate
finance needs to be addressed by a funding
stream throughout the entire public sector.
3.
Neither fund developed into a costed and
prioritized programme embedded into national
development planning and budgetary systems.
4.
Lack of coordination between relevant
ministries and implementing agencies.
5.
Proliferation and variety of funds makes it
difficult to ensure funds complement each
other’s investments.
Challenges of the
Climate Funds
1.
Controversy amongst policy, planning,
coordination and finance roles as CSOs and
the community marginalized
7.
Capacity Gaps in terms of Institutions and
human resources
8.
Donor capacity issues – how to spend their
money wisely and where climate change fits in
with longer running programmes.
Challenges of the
Climate Funds (contd.)
6.
1.
Climate change must be incorporated and recognized as a part of
development at all levels
2.
Development of a national Climate Fiscal Framework within which
roles of involved parties can be allocated.
3.
Strengthening key relationships and coordination processes with focus
on:
S Addressing the transaction of strategy to implementation via
sector policy
S The communication of CC strategy to Line Ministry level with
adequate reflection within Ministry Budget Frameworks.
4.
Support provided to improve coordination within the Government
and between national and local levels.
5.
Coordination within the donor community should be improved
Scaling up and innovating. Clearer division of tasks and specialization
of development partners.
Recommendations for Coherence
Incentives and Grievances
S Leadership, good will, discriminatory decision making power and social
influence were major incentives for “Special” funding modalities.
S Contract, media exposure and project facilities were less priority incentives for
“Special” funding provisions.
S International leadership and participation in COP also a vital incentives played
behind such exceptionalism of ‘climate funds’
S Proximity to policy makers, exploitation of asymmetric access to information
S Political interference in the bureaucracy has provided incentives for ‘expert-
bureaucrats’ in bypassing the country planning and finance process. Virtually
created grievances amongst other ministries.
S Media and CSOs appeared as highly active ‘critical’ mass in expressing
grievances regarding ‘use of climate funds’
THANK YOU!
QUESTIONS?