The Government of Uzbekistan, as a part of its commitments to achieve the Sustainable Development Goals (SDGs) and to fulfil its obligations in climate change mitigation and adaptation, now starts to introduce SDG budgeting and green budgeting practices to be embedded into the country’s Public Financial Management system. 

What is SDG budgeting and green budgeting?

In order to deliver on the commitments made, the Government has to attract and allocate resources for supporting national SDGs, as well as strategies and programs aimed at climate change mitigation and adaptation. National SDGs shall be integrated into strategic planning processes, as well as in budgeting and budget execution. One of the instruments to integrate SDGs and environmental considerations into the budgetary process is the SDG budget tagging and green budget tagging.

The Government uses this instrument to identify, measure and monitor public expenditures aimed at achieving SDGs and to meet environmental priorities, which allows to make corresponding budgetary decisions and to mobilize additional resources. Moreover, this instrument increases the efficiency of budgetary spending because of alignment of allocations with SDG and green indicators.

It is important that SDG budget tagging and green budget tagging facilitate transparency and accountability of the Government regarding the expenditures allocated for SDGs and green projects, as well as consultations on them both among experts and the public.

How do these instruments operate globally?

Although SDG budget tagging and green/climate budget tagging represent a rather new instrument, there is an increasing accumulation of experience in their adoption and implementation globally.  SDG budget tagging has been already introduced in Mexico and Nepal. Green budget tagging and green budgeting are being implemented in France, Columbia, Armenia, Ireland, and in other countries.

Experience of France, which became the first country that presented a green budget, is of a special interest. Public expenditures and revenues in the France’s budget are rated as favorable, unfavorable, and mixed, depending on its impact with regard to the following six environmental objectives: Climate change mitigation; Climate change adaptation; Water resources management; Circular economy and waste management; Pollution abatement; as well as Biodiversity and sustainable land use.

For example, expenditures for construction of new rail lines are assessed as “mixed”. In the medium term, these expenditures will reduce the carbon footprint of mobility and transport, but their construction and production result in environmental pollution and have negative impact on biodiversity. In such a way every single budget line is rated, and thus it gives a picture of the amount of “green”, “mixed” and “brown” expenditures that have a negative environmental impact. Such classification allows to assess how the France’s budget facilitates delivery on commitments related to implementation of the Paris Agreement (2015). 

Situation in Uzbekistan

In 2019 the first steps have been undertaken in Uzbekistan to perform SDG budget tagging. Expert assessment-based approach has been applied to assess expenditures aimed to implement 16 national SDGs. Assessment findings are published annually in the “Citizen’s budget”, and thus they are available to the general public. However, given that this tagging is provided unsystematically, it has limited use and needs further improvement in order to become an effective instrument for achieving SDGs and moving to a green economy.

In this regard, UNDP and French Development Agency (AFD) signed a New Partnership Agreement in February 2022 aimed to jointly implement a comprehensive capacity development program on strengthening national capacities towards introduction of SDG budgeting and green budgeting methodologies and practices in Uzbekistan. Within the framework of this partnership, a two-day Introductory workshop on this topic has been organized for the specialists from the Ministry of Finance and line ministries engaged in the implementation of the mentioned reforms. 

In his speech, Mr. Akhadbek Khaydarov, the Deputy Minister of Finance, emphasized that this topic is critical for Uzbekistan in the context of ongoing reforms. SDG budget tagging and green budgeting will allow to visualize allocation of budgetary funds to SDGs, climate change action, and to other environmental objectives. It will also allow to ensure more effective planning and to strengthen monitoring.

Ms. Matilda Dimovska, the UNDP Resident Representative in Uzbekistan, has added: “SDG budgeting and green budgeting are the two important initiatives to reform the budget that will require changes in the processes, systems, institutional frameworks, as well as legal and regulatory framework for these reforms to be implemented and maintained by the Government of Uzbekistan. We are happy to be part of these reforms and to support the Government of Uzbekistan in integration of SDGs, as well as in integration of environmental and green considerations into the budgetary process.”

Mr. Vincent Caupin, Head of Central Asia Office, French Development Agency noted that: “If we are experiencing sanitary and geopolitical crises right now, we should not forget that the environment crisis is with us as well. To tackle this crisis and take advantage of the opportunities created we need the instruments. Regulation is one. But fiscal policy can be powerful instrument as well.” To highlight the relevance of the workshop’s topic to the future generation, he concluded his speech by quoting an Indian proverb “We do not inherit the Earth from our ancestors, we borrow it from our children”.

Speakers participating in the development of the SDG Budget Tagging Guidelines and introduction of green budgeting have presented the key methodological approaches and shared practical experience in implementation of similar reforms in Armenia, Columbia, France and in other countries.

At the end of the workshop, participants have discussed the consistency and alignment of the proposed initiatives with the ongoing reforms in the Public Financial Management area in Uzbekistan. 

In this regard, Ms. Aynura Bakaybayeva, the Chief Economist of the State Budget Department of the Ministry of Finance, has noted the following: “Now there is an apparent need to implement more advanced SDG budgeting models that will be institutionalized and will ensure strong connection with program-based budgeting in the future. International experience learned during the workshop will undoubtedly help us in our work on aligning the discussed initiatives with the ongoing reforms in Uzbekistan.”