In a historic step towards accelerating progress on the ambitious Sustainable Development Goals (SDGs), Sri Lanka recently introduced the SDG Budget Coding and Tagging System to the National Budget as a key initiative to improve transparency, accountability, and efficiency in public resource allocation aligned with the SDGs.
By revolutionising the allocation and tracking of public funds, the expectation is to ensure that public investments are directed towards initiatives that promise greater economic, social, and environmental well-being.
The 2024 Budget Circular No: 04/2023, issued by the Ministry of Finance, requires all Government institutions to tag public expenditure estimates according to the SDG classification guidelines issued by the Sustainable Development Council (Vide Section 4.4) [1].
The common classification table is important in view of the wide scope of certain SDG targets. In the absence of clear guidelines, the identification of expenditure lines against SDGs is open to diverse interpretations. As such, the recently-developed SDG classification table offers clarity and coherence in mapping budget allocations to specific SDGs and targets across the Government.
When SDGs become integral to national development vision and plans, its integration into the budgetary framework assumes paramount significance. The SDG implementation process encompasses vital elements such as policies, partnerships, and resource mobilisation.
Mobilisation and effective utilisation of domestic public resources stand as a core action agreed upon by member countries of the United Nations for financing SDGs, underscoring its crucial role in realising the 2030 Agenda (SDG Target 17.1).
Objectives
The objectives of the SDG Budget Coding and Tagging system are threefold:
- To provide an effective foundation for the allocation and prioritisation of public resources towards SDG programmes
- To foster coherence by establishing links between the Government budget and SDG-related policies
- To identify and recommend financing opportunities to expedite SDG implementation
There are several benefits that a country can derive by introducing the SDG Budget Coding and Tagging System to the National Budget. It will promote greater collaboration and coherence among various government ministries, departments, and agencies by aligning their efforts towards shared SDG objectives.
The system will also empower policymakers to identify inefficiencies and redirect resources to maximise the impact of SDG initiatives. Additionally, it will enhance the country’s capacity to attract international funding and investments, as donors and investors increasingly favour countries with transparent SDG implementation strategies.
Furthermore, SDG Budget Coding and Tagging also supports the development of an Integrated National Financing Framework (INFF) offering a framework at the country level for financing national sustainable development priorities and achieving the SDGs [2]. INFF would be a vital tool for policymakers, enabling them to mobilise additional financing towards sustainable development priorities.
It will also promote coherence across diverse financing policies, improve risk management in an increasingly complex financial landscape, streamline an array of financial tools available to fast-track the national development process, as well as clearly and coherently articulate the country’s sustainable development needs to the international development community.
Intl. SDG budgeting systems
Countries across the Asia Pacific, Latin America, and Africa regions as well as the OECD (e.g. New Zealand, Finland, Sweden, Norway, Germany, Iceland, etc.) have adopted SDG budgeting systems while some countries have even advanced towards the formulation of more comprehensive budgets such as the well-being budget of New Zealand.
Colombia, for example, employs a holistic approach aligning its national development plan and public investment projects with all 17 SDGs. Mexico has also taken steps to integrate gender and climate change perspectives into government planning and budgetary processes.
Formulation of the SDG Budget Tagging and Coding System in Sri Lanka was a collaborative effort of the Sustainable Development Council, the National Budget Department, and other relevant Treasury departments of the Ministry of Finance with the technical support of UNDP Sri Lanka.
References
1) Ministry of Finance, 2024 Budget Circular No: 04/2023
2) United Nations Development Program, SDG Alignment and Budget Tagging: Towards an SDG Taxonomy: Analysis for Colombia (2022)
(The writers are attached to the Sustainable Development Council of Sri Lanka)