IPS Contributes to Landmark Review of Climate Public Expenditure in Sri Lanka

Strengthening climate action requires not only ambitious policies but also effective financing and implementation. A landmark review of Sri Lanka’s climate-related public expenditure has found that climate spending averaged 7.5% of the annual government budget and 2.2% of GDP between 2016 and 2025, while highlighting the need for stronger climate budgeting and improved expenditure tracking.

A key contribution to this work came from Dr Manoj Thibbotuwawa, Research Fellow at the Institute of Policy Studies of Sri Lanka (IPS), who was part of the team supporting the development of Sri Lanka’s first Climate Public Expenditure and Institutional Review (CPEIR) for Sri Lanka 2016-2025. The review, which was prepared under the technical leadership of UNDP, provides a comprehensive assessment of how public resources are allocated towards climate action and offers recommendations to strengthen climate-responsive planning and budgeting in the country.

Commissioned by the Department of National Budget of the Ministry of Finance, Planning and Economic Development and developed by the UNDP Climate Finance Network, the review examined climate-related recurrent and capital expenditure over the period 2016-2025 alongside Sri Lanka’s climate policy and institutional frameworks.

The study found that climate expenditure increased substantially over the review period, reaching nearly LKR 958 billion in 2024, with adaptation-related activities accounting for around 62% of total climate spending. Among its recommendations, the report calls for the institutionalisation of Climate Budget Tagging, stronger monitoring systems, improved inter-agency coordination, and greater mobilisation of international climate finance to support Sri Lanka’s climate commitments and resilience goals.