2016年-世界发展银行全球_Colombia___Policy_Strategy_for_Public_Financial_Management_of_Natural_Disaster_Risk_20页_954kb

Summary of Colombia: Policy Strategy for Public Financial Management of Natural Disaster Risk

Core Content

Colombia faces a high recurrence rate of natural disaster events, which poses a significant challenge to its fiscal sustainability and stability. The country experiences an average of 600 natural disaster events per year, with economic growth increasing the base of assets exposed to disaster risks. This can lead to substantial fiscal losses unless accompanied by disaster risk mitigation strategies. The Ministry of Finance and Public Credit (MHCP) has taken a proactive approach in integrating disaster risk management into the country's fiscal and policy frameworks.

Main Policy Objectives

The MHCP has identified three priority policy objectives for managing natural disaster fiscal risk:

1. Identification and understanding of fiscal risk due to natural disasters

   • Assessing the potential fiscal losses from disasters using probabilistic models.
   • Estimating contingent liabilities at approximately 1.4% of GDP for a 1-in-250 year earthquake event.
   • Improving data collection on public assets and historical disaster losses.
   • Establishing databases for asset characteristics and insurance policies, aligned with the National System for Disaster Risk Management (Law 1523 of 2012).

2. Financial management of natural disaster risk, including innovative financial instruments

   • Implementing a multi-layer financial strategy to manage risk, including the use of the National Fund for Disaster Risk Management (FNGRD) and Catastrophe Deferred Drawdown Option (Cat DDO) loans.
   • The FNGRD is the first source of funding for disaster response, followed by contingent credit.
   • The MHCP has signed two Cat DDO loans, the first in 2008 and the second in 2012, both offering lower interest rates than conventional loans.
   • Evaluating market-based instruments such as catastrophe bonds, derivatives, and weather derivatives to enhance financial resilience.

3. Catastrophe risk insurance for public assets

   • Promoting mandatory insurance for public assets, with legal mandates from several Colombian laws.
   • Improving insurance coverage and pricing by aggregating demand and pooling risks.
   • Developing standardized insurance requirements for public buildings and infrastructure, particularly for PPP projects.
   • Implementing best practices for decentralized public entities to strengthen their insurance strategies.

Key Entities and Partnerships

The MHCP collaborates with several key entities and international partners to achieve these objectives:

• National Procurement Agency (CCE): Supports the standardization of insurance procurement and demand aggregation.
• National Planning Department (DNP): Provides guidance on disaster risk integration into public policy.
• National Disaster Risk Management Unit (UNGRD): Coordinates disaster risk management activities.
• National Infrastructure Agency (ANI): Works with MHCP on infrastructure risk assessment and insurance requirements.
• Colombian Geological Service (SGC): Supports geological risk analysis.
• International Partners: Includes the World Bank (DRFIP), Swiss State Secretariat for Economic Affairs (SECO), and the Global Facility for Disaster Reduction and Recovery (GFDRR).

Legal Framework

The legal basis for managing natural disaster fiscal risks in Colombia is supported by several laws and regulations:

• Law 448 of 1998: Requires entities to include resources in their budgets for covering contingent liabilities.
• Law 819 of 2003: Mandates the inclusion of explicit contingent liabilities in the Medium-Term Fiscal Framework.
• Law 1523 of 2012: Establishes the National System for Disaster Risk Management and the FNGRD.
• Law 1508 of 2012 and CONPES 3714 of 2011: Require disaster risk analysis in infrastructure projects and public procurement processes.

Fiscal Risk Mitigation Strategy

The MHCP's strategy is designed to reduce fiscal vulnerability and improve the government's capacity to respond to natural disasters:

• Risk Assessment: Utilizing advanced models to estimate potential losses and understand the fiscal risk profile.
• Contingent Credit Lines: Accessible through Cat DDO loans, which provide liquidity at lower interest rates.
• Insurance Instruments: Focusing on improving coverage for public assets and infrastructure, especially through PPP and standardized frameworks.
• Legal and Institutional Support: Ensuring compliance with insurance mandates and promoting transparency in fiscal risk management.

Conclusion

The MHCP is committed to a long-term strategy for managing fiscal risk from natural disasters. This includes identifying and understanding the risks, implementing innovative financial instruments, and enhancing insurance coverage for public assets. These efforts are supported by both domestic institutions and international partners, aiming to improve the resilience of the Colombian economy and government in the face of natural disaster events.