Converging climate change and fiscal pressures put Ministries of Finance in the spotlight
Countries around the world are grappling with the dual challenge of addressing climate change and fiscal sustainability. By 2030, an estimated US$2.4 trillion will be required annually to address climate change in emerging markets and developing countries alone (IHLEG, 2024). With climate and the broader environmental risks intensifying in a context of limited fiscal space, competing spending demands, high public debt, and a narrow scope for tax increase amidst the growing cost of living and social concerns, Ministries of Finance (MoFs) and other Public Financial Management (PFM) stakeholders face mounting pressures to mobilize and leverage the needed financial means for mitigation, adaptation, and resilience-building. The pressure has been reinforced by global commitments, and recently by the opinion of the International Court of Justice on countries’ obligation to tackle climate change. To address the matter, the Fourth International Conference on Financing for Development (FfD4) conference outcome document – the Sevilla Commitment – promotes green budgeting, taxation and fiscal rules to integrate environmental and climate considerations into fiscal programming.
Navigating the expanding body of knowledge and tools on Green PFM
In line with mounting global urgency, the number of resources and tools for the necessary greening of public finances is also increasing. To direct policymakers and experts through this expanding landscape, the reference guide Navigating Green Public Finance Management[1] provides a curated collection of tools and resources from leading institutions to integrate environmental priorities across the PFM cycle.
Released in May 2025, the guide was produced under the multi-donor initiative Collect More – Spend Better: Green PFM, co-financed by the European Commission and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), and implemented by German International Cooperation’s (GIZ) Sector Programme on Good Financial Governance.
What the Green PFM guide offers
Designed as a one-stop reference for officials and practitioners, the guide brings together 72 practical resources spanning all stages of the PFM cycle, from strategic planning to auditing. Resources include diagnostic tools, implementation frameworks, stocktake reviews and case studies, as well as capacity-development initiatives.
The layout of the guide helps identify the most relevant tools for each individual country context. With a structured, practical, and balanced approach, it offers:
Extensive coverage. Resources reflect diverse sustainability issues and geoeconomic contexts, providing multiple entry points for integrating climate and environmental considerations across the PFM cycle.
Global relevance. While most country examples in the resources refer to developing countries, lessons are also drawn from other regions, underlining a broad applicability.
User-friendly navigation. Resources are classified by PFM stage and type of guidance (assessment, implementation, stocktake, or capacity building), and tagged by thematic (e.g., subsidies, biodiversity, taxation) and geographic focus.
Concise and informative descriptions. Each resource is presented with key information and practical features to help determine relevance. Headlines and descriptions offer direct links to the source for further in-depth exploration.
Insights from the toolkit
Analysis of the 72 resources reveals several trends:
A strong focus on foundational aspects of upstream processes —in the fiscal framework and strategic planning, and budget preparation stages— often the first entry points for reforms.
A predominance of implementation frameworks, reflecting the demand for actionable guidance.
A wide thematic scope, from climate-sensitive budgeting to subsidy reform, biodiversity protection and disaster risk management, pointing to the complexity of integrating environmental priorities into fiscal systems.
The rapid growth of new tools — most published after 2021— reflecting the field’s dynamism.
Toolkit in practice
For MoFs just starting out, the guide points to comprehensive frameworks like PEFA Climate and the IMF’s Green PFM framework, which provide a holistic approach. Countries further along in the greening process can draw on stage-specific tools such as climate budget tagging, climate risk assessments, or sustainable procurement and public investment management guidelines.
Brief country spotlights highlight how some countries, each implementing a specific tool, are pursuing the shared objective of integrating sustainability into the core of public finance. These include for example Mexico piloting the PEFA Climate framework, Cameroon rolling out climate budget tagging, or Benin applying climate-sensitive investment management.
Making public finance fit for the future
Climate change is reshaping the fiscal policy landscape. With growing financing needs and limited fiscal space, MoFs need to innovate, coordinate, and act decisively. While not exhaustive, the Navigating Green PFM guide offers a practical map to help officials identify the most relevant resources for their context.
By equipping MoFs and PFM stakeholders with accessible, practical resources, this guide supports the global effort to green public finance—making fiscal systems more resilient, sustainable, and fit for the challenges of the future.
[1]Also available on the following platforms:
* Green Fiscal Policy Network
https://greenfiscalpolicy.org/policy_briefs/navigating-green-public-financial-management/
* Addis Tax Initiative
https://www.addistaxinitiative.net/sites/default/files/resources/Navigating%20Green%20PFM.pdf
* World Federation of Development Financing Institutions
https://wfdfi.org/en/navigating-green-public-financial-management-a-reference-guide-for-ministry-of-finance-officials/
* Green Finance Platform
https://www.greenfinanceplatform.org/guidance/navigating-green-public-financial-management-reference-guide-ministry-finance-officials
Disclaimer: The reference guide ‘Navigating Green Public Finance Management’ was produced with the financial support of the European Commission (EC) and the German Federal Ministry for Economic Cooperation and Development (BMZ). The contents of the guide and of this blog post are the sole responsibility of GIZ and do not necessarily reflect the views of the EC or BMZ.
