PEFA climate: Future- proofing our public financial management system

Assalamu alaikum wa Rahmatullahi wa Barakatuh. Our country's geographical location provides us with rich natural resources, with the economy mainly relying on agriculture and industry.

- DBM SECRETARY AMENAH F. PANGANDAMAN

In fact, agriculture contributes 14 percent to the country’s gross domestic product and employs over a third of the population.

However, it faces some of the highest disaster risks globally, which are expected to worsen as the climate changes. Climate shocks, whether from extreme weather events or slow-onset changes, are likely to worsen existing income and wealth inequalities and slow progress in poverty alleviation. According to the 2022 World Bank Country Climate and Development Report, economic damages in the Philippines could reach up to 7.6 percent of GDP by 2030 and 13.6 percent by 2040, affecting all sectors, especially capital-intensive industries and agriculture.

The Philippines also faces significant challenges in climate adaptation. In the 2024 Notre Dame Global Adaptation Initiative Country Index, the Philippines ranks 78th in vulnerability, indicating a high level of exposure and sensitivity to climate impacts, and 131st in readiness, highlighting its limited capacity to attract investments and implement effective adaptation actions.

Meanwhile, the Philippines performs relatively well in climate change mitigation, ranking 6th in the 2024 Climate Change Performance Index. However, Climate Action Tracker 2023 highlights that the Philippines’ climate policies are insufficient to meet its “fair share” of global mitigation efforts, stressing the need for more definitive policies to ensure the Philippines contributes adequately to global climate goals.