The harmful effects resulting from climate change have led to greater environmental awareness and the establishment of several international commitments. In this context, the Green Budget, a relatively recent practice adopted by an increasing number of governments, has become more relevant. By providing a greater awareness of the environmental contributions of each budget line, the Green Budget enables the alignment of budgetary policy with climate and environmental objectives and can also pave the way for the issuance of green bonds. An effective implementation of the Green Budget implies the adoption of adequate instruments (such as the classification of expenditure and revenue in terms of their climatic and environmental impacts, known as Green Budget Tagging), the establishment of an appropriate institutional framework and the timely reporting of information. The countries with more consolidated experiences in this field are France and Italy. Portugal has already taken some steps towards the implementation of a Green Budget, but it still has a long way to go, not only regarding the adoption of a set of instruments that are still missing, but also on the establishment of an institutional framework which would be included in the Budgetary Framework Law, and also on the creation of an information reporting system that promotes the transparency of the entire green budget process.
Date of last update: 27/09/2022