A green budget would have answered the question of which specific projects expenditures have been made, into which specific interventions and which projects are expected to generate the indicated revenue. This would further elucidate the net revenue or expenditure, which will provide the actual fiscal benefit to the larger economy.
Further to this, the same paragraph suggests that a number of MOUs/ Agreements have been negotiated and their implementation anticipated under Article 6 of the Paris Agreement.
A green budget would have required that these Agreements are listed and the net Internally Transferred Mitigation Outcomes (ITMOs) and their corresponding financial flows are stated. Notwithstanding, it is the case that there is a Swiss-Ghana Agreement being implemented and a Sweden-Ghana and Singapore-Ghana Agreements before Parliament for ratification.
The proposal to set a Climate Financing Division under the Ministry of Finance, as reported in paragraph 483 of the 2024 Budget Statement is consistent with the institutional architecture of green budgeting.
Such Division could be tasked with the preparation and reporting of climate investments and financial flows across all sectors of the economy. In effect, it can coordinate the financial accounting of the NDCs implementation. Like it's counterparts in Europe, it can be responsible for the preparation of the proposed 'green' Appendix 13 of the Budget.
Paragraph 486 provides information on potential green investment from the Global Shield, a post COP-27 Initiative by the G7 and CVF countries to provide insurance financing to support developing countries cope with climate disasters.
The Budget provides some detail direction of the green investment, i.e. agricultural insurance, urban flooding and coastal flooding. A typical green budget would have detailed project-specific interventions, investment levels and adaptation benefits which may be scaled to economy-side impacts. Paragraph 481 elucidates the benefits from the GCF's Ghana Shea Landscape Emission Reduction Project, with an investment of $54.5 million, restoring some 300,000 of shea and savanna forest and woodland landscapes.
An economy-side impact of the benefits of such investment would be an interesting component of a green budget. The Budget also captures other green investments, such as those reported in paragraph 635 on the Greening Ghana Day and paragraphs 636 to 637 on national afforestation efforts which provides empirical contexts for green budgeting.
The levels of investments against the expected revenue using indicators like the Net Present Values and ecosystem services' impact on the larger economy are important ingredients of a green budget.
To conclude on these, we need to add an Appendix to the Budget to highlight Ghana's green targets, green revenue and expenditures, both on allocation and executed basis. We need to assign an agency, perhaps the proposed Climate Change...Unit in the Ministry of Finance.
In France, The General Inspectorate of France has developed green budgeting methodology and it is in charge of drafting and green budgeting report which is annex to the draft public budget. Ireland uses a Climate Action Unit at the Department of Public Expenditure and Reforms to perform the task of climate tracking of expenditure.
In Italy, all administrations have to report the actual share of environmental expenditure for each budgetary action and its Ministry of Finance reviews them.
What this means is that the institutional set-up should be strengthened to ensures transparency and accountability to limit as much as possible 'green washing' in national policy and budget presentations.
The Green budgeting also provide opportunities for climate finance think-tanks, civil society and Parliament to participate in green watch. Whiles it provides opportunities for independent opinion on government's commitments to greenness, it provides a powerful tool for parliamentary oversight.
A greater use of green budgeting tools will help to redirect public investment, corruption and taxation to green projects and away from harmful subsidies. Not surprisingly, the European Commission has developed technical support institutions to help Member states build capacity for developing a green budgeting framework; Ghana must move into this direction.
To better align a country's budget with environmental goals, assessing the extent at what both revenue and expenditure contributions to the environment is an essential first step and a crucial element of green budgeting.
Many countries in the EU have not integrated green budgeting. According to Bova'sanalysis (2021), Sweden, Finland, France, Italy and EU are strong on this. Sweden report mainly on climate change mitigation measures, Finland report on appropriations for Renewable Energy, emission reductions, biodiversity and environmental protection while France report on climate change mitigation, adaption, water resources management, pollution abatement, biodiversity and landscape protection. The EU itself report on climate change, biodiversity and clean air.
The coverage of budgetary items spans from revenue, allocated expenditure, executed expenditure and tax expenditure in different countries in the EU.
In conclusion, with the bold policy intent of providing a strong leadership to advocate for a fit-for-climate financial system and the new direction of targeting climate financing as a major area of public investment as espoused in paragraph 481 of the Budget, it is important that the Ministry of Finance and Parliament of Ghana pay greater attention to reform towards green budgeting.
Even though this is desired, it must be admitted that enormous institutional capacity and orientation is needed to shift towards the new paradigm of green budgeting.
The writer is Member of Parliament of Oforikrom Constituency