How to Link SDGs to the Budget

SDGs and the Budget

Posted by Suren Poghosyan[1]

The Millennium Development Goals (MDGs) were critical in presenting a global policy agenda with country-specific targets. MDG processes, however, were not well coordinated with countries’ national policies and budget processes. Ministries of finance were detached from the core dialog on MDGs, and there was a mismatch between the MDGs and budget classification systems. The 17 Sustainable Development Goals (SDGs) have replaced the MDGs with a more comprehensive policy agenda that now covers all countries. Developing countries, however, will face challenges in effectively transforming the SDGs into national policies and budgets. How therefore to build a stronger bridge between the SDGs and countries’ budget processes?

Even if development goals are effectively transformed into sector strategies, budget decisions are based on their own set of processes and parameters. Some reports suggest that the UN’s functional classification system (COFOG) has been used to bridge budget allocations with the MDGs, but COFOG was never designed to serve that purpose. In some countries, civil society organizations (CSOs) have monitored the impact of selected MDGs on the budget. However, in most cases, finance ministries have continued their routine budget planning and execution processes with only occasional reflections on the MDG targets.

In countries with a program-based budgeting system, one possible way forward would be to introduce a budget classification that groups and then bridges programs with the SDGs. However, such an approach is not ideal. A better solution might be for an international organization (e.g., UNSTATS) to design a universal SDG budget classification, and propose a methodology for mapping this system with other classifications. The advantages of such an approach are as follows:

Of course, there would be challenges in introducing a universal SDG classification, such as resource constraints, potential overcrowding of budget databases, and the tendency for international organizations and donors to dominate the policy agenda. The introduction of SDG classification is a long journey and its first step might be some basic SDG budget table configured manually. In any case, the sooner the debate starts, the better the solutions that will be found.

[1] Governance and Public Finance Specialist, UNDP, Bangkok Regional Hub. The content of this article does not necessarily reflect the official opinion of the UNDP.

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