The FINANCIAL — The Asian Development Bank (ADB) is providing a NZ$13.95 million (around $10 million) policy-based loan from its Ordinary Capital Resources to fund the Cook Islands Disaster Resilience Program which will rapidly make available financing in the event of a disaster.
The Disaster Resilience Program is the first time ADB has provided disaster contingent financing through innovative use of policy-based lending. The program supports implementation of the government’s National Sustainable Development Plan, through the achievement of critical actions in the areas of policy strengthening and institutional arrangements for disaster risk management, building resilient infrastructure, and expanding disaster risk financing.
Government efforts over the past year have included integration of disaster resilience into infrastructure priorities, advance preparation of the private sector for post-disaster recovery activities, preparation of local disaster plans, and improved public sector coordination on disaster risk management. Completion of the set of 12 priority actions means the government is now eligible to access the contingent credit provided through the policy-based loan to meet short-term post-disaster financing needs, according to ADB.
“The Cook Islands is highly vulnerable to natural hazards, particularly cyclones, floods, and even tsunamis” said Emma Veve, Director of ADB’s Pacific Department. “The country must be commended for actively strengthening its financial reserves and instruments to better respond to the effects of a disaster should one strike.”
The loan funds will be available for a three-year period (until December 2019) and drawn upon as needed if a state of disaster is declared by the government. The funds can be used flexibly to support short-term post-disaster activities the government deems necessary. The ADB financing complements government’s own disaster trust fund which is its first line of response, and insurance through the Pacific Catastrophe Risk Assessment and Financing Initiative which would be activated in the event of an infrequent but highly destructive disaster. Having different layers of financing is an integral part of the Cook Islands’ preparedness for disasters.
ADB has been supporting the Cook Islands since 1976, having approved over $97 million in loans, grants, and technical assistance.