THE Asian Development Bank (ADB) has approved a $500-million loan to help the Philippines prepare for natural hazards or public health emergencies, including piloting the first disaster insurance scheme in Southeast Asia.
In a statement, the ADB said the new policy-based loan supports pending legislation in Congress to merge the functions of the National Disaster Risk Reduction and Management Council and the Office of Civil Defense under a new Department of Disaster Resilience. This is seen to speed up the government’s disaster response and substantially reduce coordination and bureaucratic inefficiencies.
ADB Vice President Ahmed M. Saeed said this financing will help the country since it has been hit not only by the pandemic but by major disasters in recent years, including Supertyphoon Haiyan (Yolanda) in 2013 and the Taal Volcano eruption in January 2020.
“This new contingent disaster financing instrument will help the government manage fiscal risks posed by those shocks and lessen the economic and social impacts on people’s livelihoods and the country’s economy,” Saeed added.
The disaster insurance scheme will be piloted in several cities across the country to bolster their fiscal resilience. It also aims to provide a predictable, timely source of financing for post-disaster response.
The loan will make climate-change adaptation and disaster risk reduction an integral part of comprehensive development plans of local government units (LGUs), even beyond the pandemic.
The Philippines is among the most disaster-prone countries in the world, including active volcanoes, frequent earthquakes, and an average of 20 typhoons a year causing floods and landslides.
Nearly three-fourths of the country’s population are vulnerable to multiple natural hazards, and such disasters worsen poverty in typhoon-prone provinces along the country’s eastern seaboard.
Disasters cost the Philippines 0.7 percent to 1 percent of gross domestic product every year, including about P43.5 billion ($890 million) caused by earthquakes and around P133 billion ($2.7 billion) from typhoons.
“The Disaster Resilience Improvement Program will support government policy reforms aimed at ensuring the government can quickly address the needs of vulnerable segments of the population following disasters. It will also strengthen the Philippines’s overall response to disasters and pandemics,” ADB Financial Sector Specialist for Southeast Asia Benita Ainabe said.
The ADB has provided significant post-disaster support to the Philippines since the 1980s, especially after Supertyphoon Yolanda. The ADB’s rehabilitation and reconstruction assistance for damaged public assets in the country is valued at around $1.8 billion in inflation-adjusted terms.
It has also provided at least $1.8 billion in loans and grants to assist the government in its urgent Covid-19 response.