Bangladesh Development & Climate Change Context 

Over the last ten years Bangladesh has made impressive gains in key human development indicators. According to the 2008 UNDP Human Development Index Statistical Update, Bangladesh ranks 147th among 179 countries with an HDI score of 0.524, placing it among countries considered to have achieved medium human development. But even as Bangladesh has taken these considerable steps towards poverty alleviation, many challenges remain. More than 63 million people live below the poverty line. 

The constant threat of shocks – natural, political, or economic - the uncertain impact of globalization, and an increasingly competitive international trade environment impede higher growth rates. In addition, structural changes in rural Bangladesh have spurred rapid economic migration. This exacerbates urban poverty, creates a lack of reliable work and leads to congestion and limited shelter in urban areas. Bangladesh thus faces considerable challenges to sustain and build on the achievements of the last decade, and to remain on track to meet its targets under Sustainable Development Goals (SDGs).

Bangladesh remains a Least Developed Country (LDC) and is highly vulnerable to climate change impacts, both to extreme climate events and slow onset climate change. Bangladesh as a low-lying delta ecosystem rankssixthamongst those 10 most climate vulnerable countries in the world (Climate Risk Index, German watch, 2017). Therefore, timely and effective response to climate change is critical to maintain the development progress so far, facilitate adaptation to climate change as well as transition to low-carbon development as Bangladesh’s economy grows.

Figure1: Bangladesh Climate Change Finance Flow

Bangladesh Climate Fiscal Framework

In June, 2014 Bangladesh undertook a Climate Fiscal Framework. This stemmed from a Bangladesh Climate Public Expenditure and Institutional Review (CPEIR) which was conducted in 2012. The CPEIR’s key recommendations included (i) the development of a climate fiscal framework (CFF) that would identify the demand (expenditure) and supply (revenue or finance) sides of climate fiscal funds, and (ii) the establishment of a transparent and sustainable climate fiscal policy (CFP).

The Climate Fiscal Framework (CFF) aims to provide a framework for defining, tagging and managing domestic and international climate finance in an effective and transparent manner, providing the “financial backbone” for national efforts in addressing climate change. Specifically, the CFF aims to promote a country system whereby: 

1.Costs and prioritization of climate actions are reflected in the existing national budgetary framework

2. Climate-related expenditures are routinely tracked and monitored. Climate expenditure definition is systematically revised in order to reflect the national priorities and circumstances.  

3. The GoB can more effectively access international climate finance as well as manage national climate funds

4. Institutional weaknesses and skills gaps are identified and addressed.

Bangladesh Climate policy and Institutional Review

A Bangladesh Climate Pubic Expenditure and Institutional Review (CPEIR) was conducted in 2012, implemented by the Bangladesh Planning Commission, with support from UNDP and UNEP, reviewing the existing climate policy, institutional arrangements as well as public expenditures on climate activities in Bangladesh. This CPEIR was steered by an Inter-Ministerial group including Planning Commission, Ministry of Finance, Ministry of Local Government, Ministry of Environment and Forests, Ministry of Disaster Management and Ministry of Water Resources. The CPEIR reviewed policies and institutional issues with some of the key findings are set out below. On expenditures, the review found that Bangladesh is spending about USD 1 billion per year on climate related expenditures of which 75% comes from domestic resources. These findings interested the Ministry of Finance who agreed as a next step to develop a Climate Fiscal Framework to improve management of these resources and better link them to the national budget process.