MACTAN ISLAND, Cebu, Philippines The World Bank said yesterday it is still mulling ways to further improve the ability of the Philippines to withstand shocks coming from natural disasters such as typhoons and earthquakes.
Rachel Kyte, vice president and special envoy for climate change at the World Bank, said in a briefing the bank has been in talks with the Philippine government following the devastation of Super Typhoon Yolanda in late 2013.
“Together with the Philippine government, we are trying to build a much more robust, comprehensive, financial resilience system that will offer insurance and risk transfers at the national government level, local government unit level, and individual household level,” Kyte said.
She said these efforts would be in addition to the $500-million credit line for the Philippines created by World Bank in 2011 meant especially for reconstruction efforts and for coping in the face of natural disasters. The funds come from the Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option (Cat-DDO).
“At the local level, we’re looking at how to establish a catastrophe insurance facility while at the individual household level, the International Finance Corp. is working together with clients in the Philippines to see whether or not it is possible to establish a national catastrophe risk insurance pool for small and medium enterprises, and home owners,” Kyte said.
She noted issuing catastrophe bonds guaranteed by the Philippine government is among the options being eyed as the bank continues to assess which financial instruments would work best for the country.
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“One has to build the resilience in the infrastructure and the economy in countries like the Philippines where we know there will be unpredictable disasters both geophysical and meteorological,” Kyte said.
The Philippine government mainly relies on budget allocations and special appropriations in funding disaster recovery efforts as the insurance market remains underdeveloped.
The country experiences typhoons, flooding, and earthquakes, among others, every year, leading to economic losses and deaths.
The government has first floated the idea of issuing catastrophe bonds, which are insurance-linked back in 2011. Last week, Finance Secretary Cesar Purisima said the country is eyeing catastrophe bonds amounting from $100 million to $300 million to help allocate more funds for calamities.