In the context of the health crisis caused by the COVID-19 pandemic and against the backdrop of the climate crisis, COSEFIN member countries were offered a space for discussion on progress i

n the use of green fiscal policy and the opportunities it has for moving towards a green recovery.

On September 24, 2020, the virtual event "Progress on green fiscal policies in COSEFIN member countries and opportunities for a green recovery" was organised as part of the regional work plan of the Council of Finance Ministers of Central America, Panama and the Dominican Republic (COSEFIN) on green fiscal policy issues, especially of its Regional Technical Committee and in the framework of the cooperation that ECLAC is offering to this group of countries under the EUROCLIMA+ Programme.

On this occasion, we sought to provide a space for countries to exchange ideas and experiences on the use of green fiscal policy and the options and opportunities to move towards a sustainable recovery in the current context of the health, economic and climate crises, aiming to identify potential new technical collaborations that could contribute to the integration of climate actions into fiscal policies, post-covid19 economic recovery plans, and the countries' climate agendas.

At the opening, Hugo Beteta, Director of ECLAC's Subregional Headquarters in Mexico, indicated that fiscal policy can help a recovery with transformation for COSEFIN member countries. Similarly, Andrew Scyner, manager of the European Commission's regional programmes for Latin America, said that the crisis is characterised as a setback to what has been achieved with climate action but it can also be seen as an opportunity for climate action and related investments to be at the heart of the recovery. In turn, Martin Portillo, Executive Secretary of COSEFIN, thanked ECLAC for supporting the implementation of a green fiscal policy among SICA countries for sustainable and inclusive development. Finally, Ivan Acosta, Nicaraguan Minister of Finance and President Pro Tempore of COSEFIN, argued that the world is facing a relevant, non-temporary event, which should be seen beyond the COPs, and he asked about the changes that should be made for moving towards a development path and indicated that green fiscal policy is oriented towards that end.

In his presentation "Options from green fiscal policy for a green recovery: a regional perspective" Joseluis Samaniego, Director of ECLAC's Sustainable Development and Human Settlements Division, underscored the idea of deepening cooperation relations among COSEFIN countries in order to also identify new lines of cooperation. Samaniego argued that the big push for sustainability would come with a green strategy that would have impacts on both the consumption and production sides towards more sustainable patterns. "The green sectors are in renewable energies, digital coverage and its economy, clean transport, efficient buildings, smart cities and the circular economy, in nature-based solutions, and the development of the care economy," he said.

Next, Dolores Almeida, author of the document "Experiences of fiscal policy with environmental content in SICA/COSEFIN countries and public policy recommendations", explained the context of the Central American countries and the Dominican Republic (CARD) with low tax pressure, recurrent fiscal deficits, and debt financing. Almeida argued that we must think not only about income and expenditure policies, but also about financing policies, and therefore debt profiles, mainly the most concessional ones, must be rethought. The public finance expert added that in addition to structural weaknesses such as those related to disasters in the face of natural hazards, there are also the negative effects of the pandemic.

In the segment planned for the experience exchange, the invited countries (Panama, Costa Rica, Nicaragua, Guatemala, Honduras, El Salvador and the Dominican Republic), reflected on recent advances in green fiscal policy in COSEFIN member countries and their upcoming agenda with special reference to the recommendations of the document.

As follow-up proposals and next steps, Luis Krieger, ECLAC Economic Affairs Officer, proposed that economic recovery should be based on green jobs and environmental resilience. Some sectors are more likely to take better advantage of opportunities, such as the agricultural sector, by generating jobs and reducing the adverse impact of the crisis, and he invited further study in the countries in areas considered appropriate by ministries.

Jimy Ferrer, ECLAC Economic Affairs Officer presented the initiative to support the design and evaluation of public policies to promote a green post-pandemic recovery within the framework of a just transition and in line with compliance with the Paris Agreement (Green Fiscal Policy, NDC, LTS), as one of the lines of action of the EUROCLIMA+ Programme and Puja Noshadi, Director of the Good Financial Governance Programme in the SICA countries, GIZ, expressed his interest in continuing the processes already underway for cooperation between the COSEFIN member countries in different areas that would include green tax exemptions, green taxes, regulatory changes, carbon prices and long-term reforms.

Finally, in the closing session, Julie Lennox, Head of the Agricultural Development and Climate Change Unit at ECLAC's Subregional Headquarters in Mexico, highlighted the existence of a link between green fiscal policy and post-pandemic recovery. She also pointed out the existence of a new generation of policies and strategies that coincide with the issues that the Regional Technical Committee (RTC) proposed to COSEFIN in terms of green fiscal instruments (taxes, exemptions, etc.), resilient public investment, risk transfer instruments, performance budgeting and climate financing mechanisms.

Under the framework of the EUROCLIMA+ programme, and in coordination with its national focal points, ECLAC has been supporting COSEFIN with agreed technical cooperation, including a diagnosis of fiscal policy experiences with environmental content in SICA/COSEFIN countries and public policy recommendations.

About EUROCLIMA+

EUROCLIMA+ is a programme financed by the European Union to promote environmentally sustainable and climate-resilient development in 18 Latin American countries, particularly for the benefit of the most vulnerable populations. The Programme is implemented under the synergistic work of seven agencies: the Spanish Agency for International Development Cooperation (AECID), the French Development Agency (AFD), the Economic Commission for Latin America and the Caribbean (ECLAC), the German Society for International Cooperation (GIZ), Expertise France (EF), the International and Ibero-American Foundation for Administration and Public Policies (FIIAPP), and UN Environment.

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