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Developing Public Finance Initiatives in Response to Climate Change: Lessons and Perspectives for Cambodia

Phnom Penh, February 21, 2023 – Rémy Rioux, Chief executive officer of the French Development Agency (AFD) and President of FICS (Finance In Common Summit), took the opportunity of a visit to Cambodia to re assert Public Development Banks Involvement in Green Public Finance Management. AFD has been supporting Cambodia’s vast reform of public finance since 2019 and will continue to mobilize its expertise towards the government efforts, especially for Green Public Finance.

AFD has been supporting the Ministry of Economy of Finance with a technical assistance since 2019. The support, implemented by Expertise France, who took part in this visit, supported the authorities to draft their new public finance law based on international best practices and, in particular, the standards and procedures in place in the French Organic Law on Finance Laws (LOLF). 

Finance ministries have a major role to play to deliver the response to climate change challenges. Through fiscal policy and public financial management, they can align revenue collection and public expenditure processes with environmental and climate objectives by using tools such as green budgeting, mobilization of new sources of financing via sovereign green bonds, green procurement or environmental taxation. The vast reform of public finance for Cambodia, undertaken since 2005, could be an opportune moment to integrate these issues.

AFD has a strong expertise in Green Governance: France is the first country to have developed a tool to analyze the environmental impact of its budget and is one of the first sovereigns to have issued a green bond. The visit of Expertise France, accompanying Rémy Rioux, was a great opportunity to discuss the topic with various stakeholders in Cambodia.  

“We look forward at deepening our collaboration with the Cambodian minister of Finance and the country’s public banks, as part of the wider 'Finance in Common' (FiCS) movement to align the financial sector with the Paris agremeent and the SDGs” stated Rémy Rioux, AFD Chief Executive Officer, President of IDFC and Finance in Common (FiCS)”