Indonesia : Advancing a National Disaster Risk Financing Strategy--Options for Consideration
This study presents options for a national disaster risk financing strategy in Indonesia, drawing heavily on international experience. The study discusses a series of complementary options for a national disaster risk financing strategy, based on a...
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| Language: | English en_US |
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Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/07/18191656/indonesia-advancing-national-disaster-risk-financing-strategy-options-consideration http://hdl.handle.net/10986/22421 |
| Summary: | This study presents options for a
national disaster risk financing strategy in Indonesia,
drawing heavily on international experience. The study
discusses a series of complementary options for a national
disaster risk financing strategy, based on a preliminary
fiscal risk analysis and a review of the current budget
management of natural disasters in Indonesia. It benefits
from the international experience of the World Bank, which
has assisted several countries in the design and
implementation of sovereign catastrophe risk financing
strategies. The rehabilitation and reconstruction fund is
the main budget instrument for the Government of Indonesia
(GoI) to finance public post-disaster expenditures, but it
is under-capitalized. This study presents an optimal
combination of risk-retention and risk transfer instruments
that could help the GoI increase its immediate financial
response capacity against natural disasters and better
protect its fiscal balance. Building on the three-tier risk
layering approach promoted by the World Bank and the
preliminary fiscal risk assessment analysis, the following
financial strategy could be considered by the GoI. This
strategy would provide the GoI with access to immediate
liquidity in the aftermath of a disaster at a competitive
cost. The strategy would allow the GoI to access up to
US$1.8 billion liquidity in the aftermath of a disaster in
order to finance immediate post-disaster expenditures, such
as grants for livelihood and low income housing
reconstruction. Preliminary disaster fiscal risk assessment
analysis shows that this would protect the GoI against
disasters occurring every 100 years. The implementation of a
national disaster risk financing strategy would require
significant institutional capacity building. |
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