Green Fiscal Policy: Integrating Sustainability into National Budgeting Systems

Abstract

The rising urgency of climate change, environmental degradation, and unsustainable development models has necessitated the reevaluation of fiscal policies worldwide. Green fiscal policy (GFP) offers a strategic mechanism to align national budgeting systems with sustainability objectives, thereby promoting environmental protection, social inclusion, and economic resilience. This paper investigates the role of GFP in integrating sustainability into the public finance architecture of nations. It explores theoretical foundations, international frameworks, and practical applications of green budgeting. The paper also presents experimental modeling based on real fiscal data to analyze the efficiency of GFP instruments such as green taxes, subsidies, and budget tagging. Results suggest that strategic alignment of fiscal tools with environmental targets leads to improved ecological outcomes without compromising economic growth. Challenges such as political economy dynamics, institutional constraints, and data limitations are critically discussed. The study offers recommendations for designing effective green fiscal frameworks adaptable to diverse governance systems.