2016年-世界发展银行全球_Fiscal_Disaster_Risk_Assessment_and_Risk_Financing_Options___Sri_Lanka_66页_1001kb

Summary of Fiscal Disaster Risk Assessment and Risk Financing Options in Sri Lanka

Core Content

This report provides an in-depth analysis of fiscal disaster risk in Sri Lanka and outlines strategic options for improving disaster risk financing and insurance (DRFI) mechanisms. It aims to raise awareness of the financial impacts of natural disasters on the Government of Sri Lanka (GoSL) and to support the development of a comprehensive DRFI strategy.

The report is part of the broader Sri Lanka Climate Resilience Program, which includes the Climate Resilience Improvement Project (US$110 million) and a World Bank Development Policy Loan with a Catastrophe Deferred Drawdown Option (Cat-DDO) (US$102 million). These initiatives aim to reduce physical risks and enhance fiscal resilience to disasters.

Main Points

Risk Profile

• Sri Lanka faces a mix of high-frequency, low-severity events (such as floods) and infrequent, high-impact events (such as cyclones and droughts).
• Floods are relatively frequent and have moderate impacts.
• Cyclones and droughts are rare but cause severe damage.
• The 2004 Indian Ocean earthquake and tsunami had a major impact, though it was excluded from the probabilistic analysis due to limited data.

Fiscal Impact

• Over the long term, the combined average annual loss to the housing, roads, and relief sectors from natural disasters is estimated at SL Rs 50 billion (US$0.38 billion).
• This accounts for 0.50% of GDP and 3% of total government expenditure.
• For a 100-year return period, the total housing/roads/relief losses are estimated at SL Rs 237 billion (US$1.8 billion), equivalent to 2.4% of GDP and 14.2% of total government expenditure.

Insurance Industry Overview

• There are 21 insurance companies in Sri Lanka, with 18 offering non-life insurance.
• Most insurers provide natural catastrophe coverage as an extension to fire and allied perils policies.
• The Sri Lanka Insurance Corporation (SLIC) is the state-owned leader in the non-life market, insuring public infrastructure such as roads and bridges.
• The National Insurance Trust Fund (NITF) has limited retrocession capacity, which is a concern for the insurance industry.

Strategic Options for DRFI

Key Information

• The current funding mechanism for disaster-related expenditures is inadequate, with provinces having separate and insufficient budgeting processes.
• The National Disaster Fund has not yet been established, despite being proposed in the 2005 Disaster Management Act.
• The Treasury provides rate guidance for postdisaster expenditures, which includes specific amounts for relief, rehabilitation, and other disaster-related activities.
• Donor-linked programs have accounted for over SL Rs 17 billion in disaster-related spending between 2006 and 2013.
• Data sharing and improved disaster risk assessment tools are critical for better financial planning and response.
• The DRFI Program uses a probabilistic framework and sensitivity analysis to estimate potential losses and support decision-making.
• Insurance penetration in Sri Lanka is low, with less than 1% of residential property insured against natural disasters.
• Natural catastrophe insurance and reinsurance strategies are proposed as key mechanisms to support fiscal resilience.
• The private insurance market has potential for growth, especially in the agricultural sector, with data sharing and policy improvements suggested to enhance coverage.

Challenges

• Lack of a centralized damage-and-loss data collection system is a major short-term challenge.
• Limited disaster risk assessment tools hinder the ability to quantify natural hazards and their financial impacts.
• Institutional capacity building is required for the effective implementation of a DRFI strategy.
• Donor-dependent funding is not sustainable for long-term disaster management.
• Provincial budgeting does not fully account for disaster-related needs, leading to inconsistent and insufficient funding.

Conclusion

The report outlines a range of DRFI options tailored to Sri Lanka's institutional, social, and economic context, drawing from international best practices. It emphasizes the need for improved data collection, financial tools, and institutional reforms to build a more resilient fiscal system in the face of natural disasters. The proposed strategies aim to support the GoSL in managing contingent liabilities and ensuring timely and adequate funding for disaster response and recovery.