ADB introduces contingent disaster financing for natural disasters

Source: Xinhua | 2019-08-02

The Asian Development Bank (ADB) announced on Thursday a new financing mechanism, called contingent disaster financing (CDF), designed to support the bank's 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," Director-General of ADB's Strategy, Policy and Review Department Tomoyuki Kimura said.
"It will also help promote greater preparedness and risk management in developing member countries prone to disasters," Kimura added.
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, according to the United Nations.
The Manila-based bank said CDF, which the ADB's Board of Directors approved on Thursday, 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," ADB said, adding, "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," Kimura added.