Musasizi Seeks Fiscal Space Through Climate-Smart Debt Management

Finance Minister Henry Musasizi has called for climate adaptation and resilience investments to be recognised in debt sustainability assessments. This approach is intended to expand fiscal space for development, reduce the cost of capital and strengthen economies against future shocks.

Musasizi made the call while co- chairing the 16th Ministerial Meeting of the Coalition of Finance Ministers for Climate Action in Bangkok, Thailand, on October 14, 2026, on the sidelines of the ongoing World Bank-IMF Annual Meetings.

He said work was progressing on incorporating the benefits of climate adaptation and resilience investments into debt sustainability analysis. The approach is already being replicated in Zambia, with plans to extend it to other countries.

“For most countries, this is very important because it is intended to increase the fiscal space for investment and reduce the cost of capital, thus allowing the public sector to invest in private sector finance-enabling infrastructure,” Musasizi said.

The approach seeks to strengthen how governments account for the economic benefits of investments that protect communities, infrastructure and national economies against climate-related shocks while maintaining responsible debt management.

The meeting also highlighted the growing importance of integrating climate considerations into mainstream economic and fiscal policymaking.

“The evolution of green budgeting reflects a broader shift in how governments make decisions. Climate considerations are increasingly becoming part of mainstream economic and fiscal policymaking, helping us better align public resources with long-term resilience and sustainable growth,” said Tomislav Ćorić, Deputy Prime Minister and Minister of Finance of Croatia.

World Bank Group Vice President for Planet, Guangzhe Chen, also underscored the importance of building resilience while responding to immediate economic pressures.

“At this Coalition, one message was clear: our response to today’s shocks must also build resilience for tomorrow,” Chen said.

He noted that combining sound policies with crisis financing, resilient infrastructure, guarantees and other risk-mitigation tools could help protect scarce public resources and mobilise private capital at scale.

The World Bank Group reaffirmed its commitment to supporting finance ministries in translating climate ambitions into practical, country-led action that protects development gains and builds resilient economies.

Musasizi said governments must preserve macroeconomic stability and fiscal sustainability while protecting investments that build resilience to future shocks, particularly amid the evolving global energy crisis.

The Coalition continues to advance capacity-building in climate adaptation, green transition and economic resilience. It is also strengthening cooperation with central banks and financial supervisors to support climate finance mobilisation.

The meeting also featured plans to issue the Coalition’s fourth Climate Action Statement and launch consultations on an updated flagship guide, Strengthening the Role of Ministries of Finance in Driving Climate Action. The guide is intended to reflect lessons from member countries and help finance ministries respond to emerging economic and climate-related shocks.

These initiatives are intended to strengthen the integration of climate considerations into fiscal policymaking and help countries protect development gains amid economic and climate-related pressures.