SL needs to improve disaster preparedness - IMF Report | Sunday Observer

SL needs to improve disaster preparedness - IMF Report

The Government of Sri Lanka has taken steps to improve resilience against natural disasters by introducing disaster insurance schemes, increasing mitigation spending and setting up a disaster reserve fund for post disaster reconstruction, an International Monetary Fund (IMF) staff report released last week said.

The long-run economic strategy namely ‘Vision 2025’ prioritises environmental protection and disaster management, the report states.

However, its findings reveal that weak environmental and disaster management have raised Sri Lanka’s vulnerability to natural calamities leading to colossal losses to the economy.

Thus, the country needs to improve disaster preparedness by undertaking policy measures in the near term, the report states.

It recommends a contingency budget for emergency cash support and infrastructure rehabilitation to be introduced within the budget, an automatic pricing mechanism for electricity combined with well targeted safety nets to contain fiscal risks from droughts and improve risk management of disaster insurance schemes to maximise its effectiveness for post disaster reconstruction.

It would also require going beyond the near term to develop a comprehensive disaster risk financing strategy that is consistent with the country’s debt sustainability and build up capacity for innovative risk transfer approaches such as parametric insurance, the report states.

As weather related calamities from severe floods to extreme droughts are frequent in Sri Lanka than in other countries, it is vital that the country adopts a sound disaster mitigation strategy.

Large scale flooding taking place in three consecutive years since 2016 disrupted cultivation cycles, resulting in agriculture GDP contracting by 3.8 percent and 0.8 percent in 2016 and 2017.

The food shortage contributed to food inflation accelerating to 14.4 percent y/y in December 2017 and an increase in food imports by around US$ 200 million in the same year accounting for nearly 0.2 percent of annual GDP.

The report further notes that droughts forced a shift in power generation from hydro to costly thermal sources increasing oil imports by around $ 900 million accounting for 1 percent of the GDP in 2017.

The impact of natural catastrophes have been felt disproportionately by the poor. While over two million people have been affected by floods and drought the number of food insecure households was estimated at 277,000 in August 2017.

Enhancing resilience to natural disasters and climate change needs a comprehensive, multi-pillar risk management framework such as identifying and assessing natural disaster risks, developing self insurance through fiscal and external buffers, risk reduction through structural reforms and targeted investments in infrastructure and risk transfer through disaster risk insurance, multilateral risk pools and precautionary instruments.

The National Insurance Trust Fund Board (NITF) released over Rs. 100 million to provide immediate emergency relief to the flood affected and displaced people this year through the National Natural Disaster Insurance Scheme (NNDIS).