ADB loans $200mln for government’s fund to mitigate disaster economic risks

ISLAMABAD: Asian Development Bank (ADB) on Monday agreed to loan $200 million to a new fund set up by the government to reduce socioeconomic and fiscal vulnerability to natural hazards, while the lender committed another $1 billion for the initiative over the next decade.

Under the agreement, ADB will initially contribute $200 million, while the Swiss Agency for Development and Cooperation (SDC) will provide $1.5 million to the National Disaster Risk Management Fund (NDRMF), ADB said in statement. In addition, the SDC will also provide technical assistance to the fund through the secondment of a disaster risk finance specialist.

Ministry of finance said Australian government will also provide $3.4 million in grant to the fund. NDRMF is a government-owned non-profit organisation to finance investments in disaster risk reduction and preparedness that have high economic impact.

Caretaker Finance Minister Shamshad Akhtar termed the fund as a first concrete step towards making Pakistan resilient, against natural disasters and climate change impacts. The finance minister stressed the need for setting up sustainable financing system to fund risk reduction and mitigation activities in the country.

Shamshad Akhtar reiterated full commitment of government to support NDRMF and provision of additional resources to strengthen fund’s operations to comply with international and national commitments.

ADB Country Director Xiaohong Yang lauded Pakistan for its unique capacities with regards to managing diverse range of disasters and called it as potentially the best country in terms of knowledge, regulatory framework and disaster risk management infrastructure to implement the pilot idea.

Yang expressed commitment to provide an additional funding of $1 billion for the initiative in years 2020-2030. NDRMF will be focusing on projects based on thematic areas related to multi hazard vulnerability risk assessment, community based disaster risk management, development of emergency response plans, strengthening early warning system and infrastructure development for disaster risk reduction and retrofitting of flood protection infrastructure.

Apart from risk reduction activities, NDRMF will also be working on the risk transfer mechanism system by devising a disaster risk financing strategy and conducting a pilot project, which could be scaled up at a national level.

The fund will finance up to 70 percent of the cost of eligible projects that will enhance Pakistan’s resilience to extreme weather events and other natural hazards. ADB said Pakistan remains a disaster-prone country with frequent floods and other disasters caused by climate change.

“The government as well as the affected people had limited capacity and resources to recover, resulting in disproportionate compensations to affected individuals,” the Manila-based lender said in the statement. “NDRMF was established to close the gap not only in the aftermath of disasters but also make investments in projects meant to mitigate disaster risks.”