Back to May 2020, within the EU4Climate regional project, funded by the European Union and implemented by the United Nations Development Programme, the first pilot “Study on climate finance budgeting and expenditure tracking” among the EaP countries was launched in Armenia. The study aims to increase the effectiveness of climate policy development and implementation, and to contribute to effective mobilization of international financial support.
The final report of the study - Climate Public Expenditure and Institutional Review (CPEIR), was presented to the stakeholders at the national workshop held on 2 March 2021. Among forty participants attending the workshop were policymakers, governmental, administrative and technical government officials of sub-national level, local and international experts.
“The EU is fighting climate change through ambitious policies at home and close cooperation with international partners like Armenia. Climate action is at the heart of the European Green Deal with a package of measures ranging from ambitiously cutting greenhouse gas emissions, to investing in cutting-edge research and innovation, to preserving our natural environment. We are glad to partner with the Ministries of Environment and Finance, in adopting sound climate policies & finances based on EU Member States best practice and CEPA”,- mentioned EU Ambassador to Armenia, Andrea Wiktorin.
In her welcome speech, the Deputy Minister of Environment, Anna Mazmanyan, highlighted the important support Armenia receives in the frames of EU4Climate project in its pathway of developing resilient and low-emissions climate policies. “The development of climate budget tagging system is a major step towards designing well-targeted climate policies and enhancing transparency and accountability for climate financing”, - said Ms. Mazmanyan.
“The Climate Public Expenditure and Institutional Review, that will serve to assessing opportunities and constraints for integrating climate change concerns within the national and sub-national budget allocation and expenditure processes, is another significant result of our joint cooperation with the Ministry of Environment and the Ministry of Finance”, - stated Mihaela Stojkoska, the Resident Representative a.i. of UNDP in Armenia.
In her speech, Ruzanna Gabrielyan, the Head of Budget Process Organization Department, Ministry of Finance, focused on the coherency of integrating climate expenditure indicators into the process of localization and financing of SDGs in Armenia.
In his presentation of the CPEIR, Vahan Sirunyan, the National Expert on Climate Change Budget Tagging and Programming, EU4Climate project, stated that it is an internationally widely used diagnostic tool allowing qualitative and quantitative analysis on public expenditures, institutional, policy and public finance management frameworks related to climate change. Among the key provisions of the study, he focused on its methodology as a concrete means of identification, classification and calculation of climate expenditure, being practically localized in Armenia. The methodology of the study is mostly based on a hybrid approach, where the purpose of the activities, climate impacts and benefits, indicators for classification and review of climate expenditures were considered. The study also allows a baseline progress assessment of climate expenditures tracking the dynamics of country’s progress, the assessment of situation, gaps and problems in climate agenda, outlining necessary reforms and directions, as well as international comparisons in climate change financing. Focusing on climate change expenditure analysis, Mr. Sirunyan briefed on the approaches and directions used in the process of identification, classification and weightings of climate change expenditures.
Afterwards, Vahan Sirunyan presented the key findings of climate expenditure, policy and institutional analyses and concluded his presentation by sharing the main recommendations in policy, institutional and public finance management frameworks.
John Ward, the International Consultant on Climate Change Public Expenditure Framework Development in Armenia, EU4Climate project, shared successful experiences and insights in climate finance budgeting and expenditure tracking in the EU, mainly based on the EU’s setting of explicit targets for budgeting in climate related actions through sectoral mainstreaming, ensuring more effective climate finance tracking. On the examples of case studies in other countries, he focused on the benefits from climate expenditure tracking, including clearer budget reflection of country’s climate priorities, improvement of climate-related strategic planning, mobilizing new financial resources, better reporting of international obligations and enhanced public finance management framework.
To build necessary regulations and capacities for making climate budgeting an integrated part of programmatic budgeting system, Armenia is also supported by the UNDP project “Making Finance Work for Transformative Change in Armenia: UN-locking Finance for Armenia 2030” financed by Joint SDG Fund. In this regard, the Project Coordinator, Ligia Ghazaryan, briefed on the synergies between climate finance budgeting and Development of Finance Assessment, as well as Project’s objectives and strategies of more integrated climate financing in coherency with the overall SDG tagging and financing architecture in Armenia.
Yevgen Groza, the Regional Project Manager of “EU4Climate” briefed on the current status of the Project’s activities in terms of climate related financing and the key findings of Armenia’s CPEIR. Further Mr. Groza presented the plans and recommendations of the proposed measures for the “Study on climate finance budgeting and expenditure tracking” to be carried by other EaP countries under the Project, building on the lessons learnt on the example of Armenia.
At the closing session of the workshop discussion evolved on the main findings and conclusions of the study, during which the participants shared their thoughts, questions and suggestions.
The workshop was productive to identify the implication of this study in public finance framework of Armenia and to define the EU4Climate regional project’s possible support in integration climate expenditure tracking system in program budgeting system of the country.