The Asian Development Bank (ADB) disclosed on Thursday that it has created a new financing mechanism to support developing countries in disaster preparedness and response.
In a statement, ADB said the new contingent disaster financing (CDF) mechanism will strengthen disaster preparedness and provide quick-disbursing budget support following natural disasters.
ADB said the creation of the CDF was approved by ADB’s Board of Directors on Thursday. It aims to support the bank’s Strategy 2030 which aims to increase efforts in tackling climate change and disaster resilience.
“CDF will provide a quick and flexible source of funds for developing member countries affected by disasters until funds from other sources become available,” said the Director General of ADB’s Strategy, Policy, and Partnerships Department Tomoyuki Kimura. “It will also help promote greater preparedness and risk management in developing member countries prone to disasters.”
The CDF will cover disasters triggered by natural hazards such as typhoons, floods, earthquakes, droughts, and tsunamis.
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.
The country can then quickly access the approved financing to help relieve fiscal constraints for urgent relief and recovery efforts. This will prevent 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 said.
ADB said the Asia and the Pacific, where its developing member countries are located, 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.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion.