Climate change poses an escalating macroeconomic, fiscal, and financial stability challenge for the Philippines. This Policy Note finds that climate-related losses could substantially reduce the country’s gross domestic product by 2040 and that current climate finance flows remain far below what is needed to support effective adaptation and mitigation. It also highlights a widening gap between ambitious climate commitments and their implementation, marked by declining shares of renewable energy, fragmented governance, and a heavy reliance on loan-based financing. To close the climate finance gap, the authors recommend integrating mitigation and adaptation into a coherent investment framework supported by climate proofing of public expenditures. The authors further call for institutional reforms to strengthen climate finance governance, mobilize private capital through well-designed market instruments, and expand access to concessional and international climate funds to protect vulnerable communities.
