Over the last decade, there has been an increasing acceptance of the argument that economic growth based on unplanned exploitation of natural resources is not sustainable; prominently so for a small developing country like Bangladesh which has to sustain 164 million people in an area of only 147,570 square kilometers while adapting to the effects of climate change. With its population projected to grow over 200 million in the next 30 years, Bangladesh needs to take immediate actions to prudently manage its natural capitals and protect its environment to ensure its fast economic growth is lasting as well. This is where greening the public financial management (PFM) system draws its relevance to the economic dialogue on Bangladesh’s green growth. PFM system offers some of the strongest tools to government to signal its development priorities and to concentrate actions towards achievement of the precedence development outcomes. Correspondingly, PFM system presents Government of Bangladesh with the necessary apparatus to signal its intent to focus on sustainable management of natural resources and environment protection by providing a clear mechanism for policymaking and action.
The PFM system comprises of four major phases-planning and policy development, budget formulation, budget execution, and accounting and oversight. Each component of the PFM system can be greened by embedding environmental conservation and sustainable management of natural capital as a decision making and evaluation criterion. This paper Greening Public Financial Management for Sustainable Development: A Green Fiscal Framework for Bangladesh offers suggestions on how principles of environmental conservation and sustainable use of natural capital can be embedded in, and delivered through the PFM system of Bangladesh. The core offer of this paper is design and implementation plan of a Green Fiscal Framework that will facilitate greening of the country’s PFM system, in spite of it having its unique set of weaknesses and strengths. For each component of the PFM system, we offer an assessment of immediate, medium-term and long-term green reform priorities.