ADB introduces financing for natural calamities

ISLAMABAD: The Asian Development Bank (ADB) has introduced a new financing mechanism—contingent disaster financing (CDF)—to support its developing member countries in strengthening disaster preparedness and provide quick-disbursing budget support following natural disasters.

“CDF will provide a quick and flexible source of funds for developing member countries affected by disasters until funds from other sources become available,” a statement from ADB quoted Director General of ADB’s Strategy, Policy, and Partnerships Department Tomoyuki Kimura as saying on Friday. “It will also help promote greater preparedness and risk management in developing member countries prone to disasters.”

Asia and the Pacific is the world’s most natural disaster-prone region. Between 2014 and 2017, countries in the region suffered 55 earthquakes, 217 storms and cyclones, and 236 cases of severe flooding, affecting 650 million people and causing about 33,000 deaths, according to the United Nations.

CDF—approved today by ADB’s Board of Directors—will cover disasters triggered by natural hazards such as typhoons, floods, earthquakes, droughts, and tsunamis. A key feature of CDF is that it supports essential policy reforms to strengthen disaster preparedness that are to be completed before a natural disaster occurs. Once a CDF is approved for a country, it remains active until a disaster occurs. The country can then quickly access the approved financing to help relieve fiscal constraints for urgent relief and recovery efforts and avoid disruptive reallocations from priority budget programs.

“Where necessary, CDF disbursements can be accompanied by follow-up assistance through ADB’s other emergency or regular lending instruments to support recovery and reconstruction,” said Mr. Kimura.

The new financing supports Strategy 2030’s operational priority of tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region, the statement added.