Update National Planning Department and National Budget Department Guidelines and Operationalise Climate Budget Tagging

Thematic Area: Environment & Climate Change

Start Date: July 17, 2026

This project focuses on integrating Climate Budget Tagging (CBT) into Sri Lanka’s core public financial management (PFM) architecture. CBT is a tool that identifies, classifies, and monitors climate-relevant expenditures within a government budget.

The Ministry of Finance, Planning, and Economic Development has developed a comprehensive CBT system to better align public finance with the country’s climate policy commitments, with the support of the United Nations Development Programme (UNDP) Sri Lanka through the Climate Finance Network Project, funded by the United Kingdom Government’s Climate Action for Resilient Asia programme. In 2025, the Ministry initiated CBT through the Budget Call Circular, requesting line ministries to classify projects according to their contributions to climate change adaptation, climate change mitigation, and addressing loss and damage.

Building on this initiative, the project aims to update the guidelines of the National Planning Department and the National Budget Department to align them with the CBT system. Accordingly, the project supports the Ministry’s efforts to operationalise the CBT system, ensuring its systematic integration into project appraisal, budget formulation, and budget submission processes. By embedding climate considerations within key planning and budgeting procedures, the project will strengthen the alignment of public expenditure with national climate priorities and commitments.