Philippines shares disaster risk financing strategies in IMF meet

MANILA, Philippines — Combining different risk financing instruments is an important strategy to enable the government to protect the public against the impact of natural disasters, the Department of Budget and Management (DBM) said.

During a high level dialogue with other countries, Budget Secretary Benjamin Diokno shared the Philippines’ experience in disaster risk financing and insurance, particularly on sources of funds, budgetary instruments, and trends.

Diokno said  financing for disasters should factor in the timing of post-disaster needs, as well as long-term costs of the sources of financing.

“The Philippine government recommends combining different risk financing instruments to protect against events of different frequency and severity,” Diokno said during the High-Level Dialogue on Disaster Risk and Financing and Insurance in Indonesia.

“Risk layering...ensures that cheaper sources of money are used first, with the most expensive instruments used only in exceptional circumstances,” he added.

Citing the Philippines, Diokno shared that the government has a standby loan facility which provides immediate liquidity in the aftermath of a disaster.

On top of this, he said the Bureau of the Treasury has also secured a Parametric Insurance Policy from the Government Service Insurance System (GSIS) that offers payouts without need for actual assessment loss, but is triggered  based on modelled losses generated using the Philippines’ catastrophe risk model.

Diokno also discussed the different budgetary instruments available for disaster risk management and response, such as the National Disaster Risk Reduction and Management Fund, Quick Response Fund, and Local Disaster Risk Reduction and Management Fund.

 He also emphasized the importance of consolidating efforts among agencies working on disaster risk reduction and management.

Diokno cited the Philippines’ Risk Resiliency Program (RRP), a nationwide investment program on climate change, as a product of interagency efforts in the country.

 He said agencies involved in the implementation of the RRP have adopted the DBM’s Program Convergence Budgeting (PCB) policy, wherein agencies are made to “work as one to meet common objectives, instead of competing for budgets.”

“Through Program Convergence Budgeting, the RRP has allowed the government to improve targeting of climate investments,” Diokno said.

The High-Level Dialogue on Disaster Risk and Financing and Insurance is one of the key events of the 2018 World Bank- International Monetary Fund Annual Meetings.