Navigating the just climate transition in a low-growth macroeconomic context: The critical role of finance ministries

Finance ministries can play a critical role in supporting climate action. Through the various fiscal policy tools at their disposal, they can join forces with other areas of government to create climate resilient economies and lay the foundations for a sustainable development strategy.

The transition to a low-carbon economy is a complex and multidimensional transformation process that involves several opportunities and risks. Furthermore, this transition must take place in an international macroeconomic context of low growth, potentially high financial instability and greater geopolitical uncertainty that limits the policy options that countries can take advantage of. Ministries of Finance can contribute to reducing these risks and taking advantage of opportunities by combining public investment, tax policy, debt management and climate financing tools and supporting other areas of government in the development of social, innovation and nature-related policies. specific.

To adequately play the crucial role they are called to play, Finance Ministries need analytical tools to support their decision-making processes. Economic and climate policy proposals should be evaluated based on their effectiveness and efficiency in achieving their climate and natural objectives and related socioeconomic consequences, together with the capacity of public finances to address these challenges without jeopardizing macrofinancial stability.

What are the central climate policy issues facing Finance Ministries? What analytical tools have already been developed and what are their advantages and limitations? Is there a need to create new analytical tools with features that existing ones lack?

This workshop aims to share these key policy issues and existing technical expertise in the LAC region.

Results:

•The Finance Ministries of LAC countries share their main policy questions on climate change and a just transition to a low-carbon economy.
•Participants better understand existing analytical solutions and how new climate analytical tools could address the policy questions raised.
•C3A incorporates demands from the Ministries of Finance in its package of analytical tools.