2013年-世界发展银行全球_Colombia___Policy_Strategy_for_Public_Financial_Management_of_Natural_Disaster_Risk_16页_1mb

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

Core Content

Colombia faces significant challenges in managing fiscal risks due to natural disasters, which are frequent and increasingly impactful as the country's population and economy grow. The Government of Colombia (GoC) has taken a proactive approach by integrating disaster risk management into its policy and programs, particularly through the National Development Plan "Prosperity for All 2010-2014" and the Ministry of Finance and Public Credit (MHCP) Strategic Plan. The MHCP has identified three priority policy objectives to assess, reduce, and manage fiscal risk from natural disasters.

Main Policy Objectives

1. Identification and Understanding of Fiscal Risk Due to Natural Disasters

   • The MHCP uses a probabilistic catastrophe risk model to estimate potential fiscal losses, such as a 1-in-250 year earthquake causing losses of approximately 1.4% of GDP.
   • A database of public assets and their exposure to natural disasters is being developed to improve risk assessment and inform investment decisions.
   • The MHCP is working with the National Geological Service (SGC) to model expected losses and with the World Bank and SECO to enhance financial risk analytics tools.

2. Financial Management of Natural Disaster Risk

   • The MHCP has implemented a multi-layer financial strategy, including the use of the National Fund for Disaster Risk Management (FNGRD) and Catastrophe Deferred Drawdown Option (Cat DDO) loans.
   • The FNGRD serves as the first layer of financial resources, while Cat DDO provides immediate access to liquidity for severe disasters.
   • The MHCP is exploring market-based instruments such as catastrophe swaps, bonds, and weather derivatives to further enhance its financial risk management strategy.
   • A catastrophe risk derivative is under consideration to transfer seismic risk from the GoC to the World Bank and then to the international reinsurance market.

3. Catastrophe Risk Insurance for Public Assets

   • The MHCP aims to improve insurance coverage for public assets by promoting a collective approach and risk pooling.
   • Current insurance policies are fragmented, with each entity managing its own coverage, and the MHCP seeks to consolidate these to achieve better risk management and cost efficiency.
   • The MHCP is collaborating with the National Procurement Agency (CCE) and other entities to define technical, legal, and financial requirements for a collective insurance scheme.
   • Insurance requirements for public-private partnerships (PPPs) have been enhanced with technical support from the World Bank.

Key Collaborations and Partnerships

• The MHCP works closely with the National Procurement Agency (CCE), National Infrastructure Agency (ANI), and the National Disaster Risk Management Unit (UNGRD) to implement the policy objectives.
• The MHCP has a strong partnership with the World Bank's Disaster Risk Financing and Insurance Program (DRFIP), supported by the Swiss State Secretariat for Economic Affairs (SECO) and the Global Facility for Disaster Reduction and Recovery (GFDRR).
• The policy objectives were developed with input from multidisciplinary experts and are aligned with international standards and recommendations, including those from the International Monetary Fund (IMF) and the United Nations Economic Commission for Latin America and the Caribbean (CEPAL).

Key Information

• Colombia experiences an average of 600 natural disaster events annually, with significant economic losses.
• The National Development Plan (PND) of 2010-2014 includes specific actions for the MHCP to reduce the State's fiscal vulnerability to natural disasters.
• The MHCP has secured two Cat DDO loans, totaling $400 million, to provide contingent financing for disasters.
• The 2010-2011 La Niña phenomenon caused economic losses of approximately $6 billion, highlighting the need for robust financial instruments.
• The MHCP is focused on long-term fiscal stability by improving the financial response capacity and reducing the impact of rare but severe natural events.

Conclusion

Colombia's approach to managing natural disaster risk is centered on three key policy objectives: identifying and understanding fiscal risk, implementing financial management strategies, and enhancing catastrophe insurance for public assets. These objectives are supported by legal frameworks, international collaboration, and the use of innovative financial instruments. The MHCP is committed to strengthening its financial resilience against natural disasters through a combination of risk assessment, financial tools, and insurance mechanisms.