How to incorporate SDGs into national budgeting systems

14 December 2022

The report “Emerging issues in public financial management and budgeting for the SDGs” states that “the budgeting for the SDGs as a practice is still in its infancy. Several countries have announced, through voluntary national reviews, the intention to reflect the Goals in budgetary processes but few have specified why it would be relevant to do so or how the practice could be made operational”.

For most countries the simplest and potentially fast solution is to re-organise the national system of program-performance budgeting (for countries without program-performance budgeting sub-system, the task may be even simpler – with the commitment or existing matching plan to connect finances to SDGs, these countries can build effective, new system, directly in a new form).

According to academic analyses, current systems of program-performance budgeting in less developed countries do not meet the expected goals of such a system. This give rise to the need to re-design national budgeting systems, to make them more effective in terms of transparency, accountability and efficiency. Such re-design would allow for incorporating relevant SDGs into national development plans, as well as indicators and targets at the national level and subsequently on lower levels. Such an approach could be recommended to all countries by UN bodies as immediate solution.

The more comprehensive (and longer-term) approach might be to develop specific SDGs-related expenditure classification level, which needs further discussions and represents longer-term alternative. Because SDGs do not cover all functional COFOG areas (COFOG = functional budget classification), simple replacement of COFOG by SDG classification is not feasible (or even may be not possible). This means that two options could be discussed – to set a third extra level of budget classification (SDGs budgeting classification) or to redesign COFOG to serve also as the tool of making SDGs-related expenditures more visible). Both approaches are technically possible; however the decision about optimum solution needs comprehensive discussions with all stakeholders. CEPA may recommend to UN bodies starting to think about launching such discussions.

Juraj Nemec, member of the Committee of Experts on Public Administration