Despite receiving billions of dollars in climate financing, the Philippines and many other developing countries may not be getting the full benefit of the funds each country has received, according to a report by the Institute for Climate and Sustainable Cities (ICSC).
The study revealed that the Philippines received $4.3 billion worth of climate financing between 2013 and 2017. However, of the amount $2.1 billion was allocated for adaptation but some $770 million, or 37 percent, could be considered as “over-reported” funds.
ICSC Deputy Executive Director Angelo Kairos dela Cruz said in some cases bilateral donors could say that they are providing $100 million for adaptation, but only $50 million or less is spent on adaptation, resulting in a bloated figure.
“Over-reporting is quite common, and it is also the bigger problem. Having a bunch of over-reported climate finance will give a bloated, unreal figure, giving an illusion that we have a lot or enough, when we actually don’t. Quality of projects usually gets compromised too,” dela Cruz told the BusinessMirror in an e-mail.
Of these over-reported funds, ICSC said many were extended by the Japanese government, the country’s primary source for Official Development Assistance (ODA) loans and the world’s leading source for climate finance.
Data showed that in the Philippines, these over-reported funds were observed for adaptation projects financed by Japan worth $425 million; the World Bank, $156 million; France, $98 million; the Asian Infrastructure Investment Bank, $54 million; and Korea, $32 million.
The study said of the $924 million reported as adaptation finance extended to the Philippines by the Japanese government, only 54 percent or $500 million could be considered as genuine adaptation financing.
“Over-reporting inflates actual contributions to our climate action. It is possible that it is simply a report wrongly made with no bad intentions, but without anyone looking, it is almost as if we are accepting the reports as they are,” dela Cruz said.
“Developed countries usually account for their climate-related spending as part of their commitments to international agreements such as in the UNFCCC [United Nations Framework Convention on Climate Change],” he added.
In order to address these concerns and others that were raised by the report, the ICSC recommended the creation of a climate finance plan. Dela Cruz said accountability is a shared responsibility of both the finance receiving and source country.
Currently, climate finance plans are being done separately by agencies, such as the Department of Finance (DOF) and the Climate Change Commission (CCC). Dela Cruz said these plans should be harmonized in order to create one solid plan for climate finance in the country.
The report also recommended the creation and institutionalization of a monitoring system for climate finance to better monitor climate finance support.
The system can then be used to cross-check reports of donor countries to the Organisation for Economic Co-operation and Development (OECD) in an effort to track their commitments better.
Sara Jane Ahmed, finance advisor to the Secretariat, Vulnerable 20 Group of Finance Ministers (V20), said better accounting of climate finance in the Philippines will also benefit the rest of the countries that comprise the V20.
Formed in 2015, the V20 Group of Finance Ministers is a dedicated cooperation initiative of economies systemically vulnerable to climate change. It was established with the inaugural meeting of the V20 Ministers of Finance of the Climate Vulnerable Forum chaired by former Finance Secretary Cesar V. Purisima in Lima, Peru.
“What affects V20 countries will increasingly impact the world economy, just as the V20 bears the brunt of the impacts of climate change and concurrent global crises,” Ahmed said.
“The V20 IMF Action Agenda calls for the systematic and universal consideration of climate physical and transition risk to make available special financial assistance for V20 countries in mitigating climate crisis impacts,” she added.
Efforts to improve the use of climate finance in the Philippines, dela Cruz said, continue as the DOF prepares the country’s climate finance road map, while working with the Climate Change Commission to deliver an ambitious Nationally Determined Contribution to the Paris Agreement. The CCC has also set up its Climate Finance Systems and Services.
He added that the House climate committee’s oversight helps address the gap in the accountability loop when it comes to financing. The legislative oversight prompts agencies to explain and encourage the government to maximize the use of these funds.
“The real test is what happens in the real economy, and the team of Sec. Dominguez has ably led the charge. We are today seeing the benefits of DOF taking the lead on climate concerns. Their expertise on finance is unparalleled and climate finance is an agenda where DOF leadership really matters,” dela Cruz said.
The V20 membership stands at 48 economies. Apart from the Philippines, this includes Afghanistan, Bangladesh, Barbados, Bhutan, Burkina Faso, Cambodia, Colombia, Comoros, Costa Rica, Democratic Republic of the Congo, Dominican Republic, Ethiopia, Fiji, The Gambia, Ghana, Grenada, and Guatemala.
The other countries include Haïti, Honduras, Kenya, Kiribati, Lebanon, Madagascar, Malawi, Maldives, Marshall Islands, Mongolia, Morocco, Nepal, Niger, Palau, Palestine, Papua New Guinea, Rwanda, Saint Lucia, Samoa, Senegal, South Sudan, Sri Lanka, Sudan, Tanzania, Timor-Leste, Tunisia, Tuvalu, Vanuatu, Vietnam and Yemen.
Read full article on BusinessMirror
