Natural disasters especially floods cause billions of dollars in damage, impacted thousands of people, and have taken many lives in Cambodia, Lao PDR, and Myanmar. In 2015 alone, floods in Myanmar displaced 1.6 million people and caused an estimated US$1.5 billion in losses and damages. These recurring floods—and other natural disasters—often leave governments with a critical need for short-term liquidity to finance response and recovery.
On May 5, 2017, the Ministry of Economy and Finance in Cambodia, Ministry of Finance in Lao PDR, Ministry of Planning and Finance in Myanmar, and Ministry of Finance in Japan signed a Memorandum of Understanding (MoU) on the establishment of a country-led Regional Technical Working Group on Disaster Risk Finance and Insurance. This new Working Group will work toward developing the Southeast Asia Disaster Risk Insurance Facility (SEADRIF), a regional catastrophe risk pool to provide rapid response financing in the immediate aftermath of a disaster.
The signing of the MoU was held during the ASEAN+3 Finance Ministers and Central Bank Governors’ Meeting in Yokohama, Japan. The ASEAN+3 Finance Ministers highlighted the development of SEADRIF as a key milestone to establish a regional catastrophe risk pool in the region, and invited other ASEAN+3 countries to join this initiative in their Joint Statement of the ASEAN+3 Finance Ministers’ Meeting.
The World Bank has partnered with ASEAN+3 countries in disaster risk financing and insurance since 2011 and is currently supporting the development of SEADRIF through both technical assistance and comprehensive investment programs. As part of these engagements, an IDA-financed project in Cambodia was recently approved by the World Bank’s Board of Directors in April 2017 and similar projects for Lao PDR and Myanmar are under preparation. Upon request from the Working Group, the World Bank will act as a secretariat of the Working Group and support participating countries to establish SEADRIF.
SEADRIF is a regional catastrophe risk pool akin to a reinsurance-based disaster liquidity facility, designed to provide participating countries in Southeast Asia affected by natural disasters with immediate rapid response financing. Countries participating in the SEADRIF also benefit from advisory services at the national level to build and implement comprehensive disaster risk finance strategies as well as the development of innovative joint regional financial solutions. Initially focused on Cambodia, Lao PDR, and Myanmar, SEADRIF could expand to other countries to strengthen regional cooperation and financial resilience.
About the World Bank Group’s Disaster Risk Financing and Insurance Program
The Disaster Risk Financing and Insurance Program (DRFIP) helps developing countries address the potentially high cost from disasters and climate shocks. DRFIP provides analytical and advisory services, convening services, and financial services to over 50 countries worldwide to support the development and implementation of comprehensive financial protection strategies against climate and disaster risks. To view an introductory video on disaster risk financing, click here.
For more information visit http://www.worldbank.org/drfi.