ADB bares new fund mechanism for natural disasters

MANILA, Philippines — The Asian Development Bank (ADB) has approved a new quick-disbursing financing mechanism meant to help developing member-countries cope with natural disasters.

The contingent disaster financing (CDF), approved by the multilateral bank’s board of directors this week, will help enhance disaster preparedness capabilities through prompt release of funds in the aftermath of 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,” said Tomoyuki Kimura, director general of ADB’s Strategy, Policy and Partnerships department.

“It will also help promote greater preparedness and risk management in developing member-countries prone to disasters,” he added.

Citing data from the United Nations, ADB noted that the Asia-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.

Natural disasters include 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 financing is approved for a country, it remains active until disaster strikes. The country can then quickly access the approved financing to help relieve fiscal constraints for urgent relief and recovery efforts, thus avoiding 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 Kimura.

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