Yuba Raj Bhusal Member Secretary

National Planning Commission Secretariat

PEI Nepal

PEI supports the national level planning process through the National Planning Commission (NPC) and The Ministry of Federal Affairs and Local Development (MoFALD)

Key Outputs– Incorporated poverty and environmental issues in the Three Year Plan

(2010-13)– Updated Poverty Monitoring Analysis System (PMAS) Indicators to

incorporate environmental indicators,– Completed Climate Public Expenditure and Institutions Review

(CPEIR),– Developed climate budget code and applied the tool to prepare

current year annual plan and budget,– Case studies on “Revenue collection from natural resources (stone,

sand & gravel mining), & investment in infrastructures (roads).

PEI Nepal Key outputs

Revised Minimum Condition and Performance Measure (MCPM) guidelines to incorporate poverty, environment at local level,

Reviewed three central projects (Agriculture, Irrigation and Road) from poverty and environment angle.

Pipeline activities (until Dec. 2012)Validation of PMAS indicatorsDevelop a green economy frameworkFormation of advisory group for PE mainstreamingRevision of IEE Guidelines and Environmental & Social Safeguard

Checklists.

Tracking Climate Public Investments The Future for Climate Finance in Nepal (2010) suggested.

Drawing a national Vision for climate finance to guide the development of new and additional funding flows

Moving from project delivery to a programmatic approach for public funding of climate programmes

Exploring possibility of tracking climate change public expenditure within the national budget

Tracking climate expenditure flows to the local level Identifying the incremental cost of making sector programmes

‘climate resilient’ (using long term tool, NPC 2010) across all sectors of the economy.

As follow up to climate finance study, conducted in 2011.

Findings Annual expenditure in climate activities constitutes around 2 to 3% of GDP

and around 8% of Government Expenditure. The trend is increasing Around 80% of climate change expenditure relates to adaptation activities Around 60% of the expenditure is executed directly by Central Agencies and

40% through Local Agencies Donor funding in government climate expenditure is about 55%. (where 25%

of the overall budget is funded by Donors)

Issues Developing a climate fiscal framework for Nepal planning , budgeting and

reporting on climate results nationally; Defining climate change expenditure (budget coding recommended).

[Coding helped define climate activities ] Delivering climate finance to the local level.[Climate policy 2011 mentions

80% has to go to the field] The need for a sector-led approach, from project to programme mode.

Climate Public Expenditure Review (CPEIR)

Fiscal Year Budget (NRs in billions)

2007/08 9.682008/09 15.152009/10 18.562010/11 25.632011/12 27.62

Climate Budget Coding Purpose

Additional funds needed to meet additional costs of mitigating climate impactsRecord climate investments in a transparent and accountable mannerDifferentiate climate problem from environmental or development problem Increased coordination among sectors and harmonization of donor support.

Formation of Interagency Climate Finance Working Group (NPC took the lead and MoF, MoEST, MoFALD, MoFSC worked as members)

[The group worked for about 8 months to do the following] Define climate activities Developed criteria and method of climate budget coding Training to planning officers on climate coding Climate code introduced from FY 2012-2013 Limitations

Used for development budget and not for recurrent costs Coded for public finance only (NGO and private sector to be included later)

Way forward

Advocacy to set up climate finance framework Institutionalization of climate budget coding

― Evaluation of information generated by climate budget codes by analyzing current year’s budget against CC strategies (e.g. NAPA activities)

― Incorporating climate budget criteria in project prioritization (P1, P2, P3) guidelines

― Evaluation of sectoral capacity of each key ministry in rating climate activities after two years of code application

Integration of climate finance delivery at the local levelHarmonization of green growth with the spirit of Rio+ 20 outcome especially focusing

on agriculture sector.