PIDS urges govt to improve disaster risk financing program

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With the rainy season’s onset, a researcher of State think tank Philippine Institute for Development Studies (PIDS) urged the government to enhance its overall disaster risk financing and insurance (DRFI) program.

PIDS also urged the government to expand its mechanisms to ease the impact of calamities like typhoons, floods and landslides as well as fast-track reconstruction and rebuilding in disaster-stricken areas.

In her study, PIDS researcher Deanna Villacin said the “ultimate objective of efficiency in DRFI management is to improve financial resilience of the country against natural disasters by minimizing its contingent liabilities.”

The Philippines relies too much on annual budget allocations – which is problematic because of its uncertainties she said.


Under the Philippine Disaster Risk Reduction and Management (DRRM) Act of 2010, financing requirements for recovery and reconstruction are mainly provided by the NDRRM Fund.

Villacin said there are instances when funds for recovery and reconstruction are inadequate.

She noted post-disaster needs assessment from typhoons ‘Nona,’ ‘Ferdie,’ ‘Lawin’ and ‘Nina’ “show that even if only prioritized or immediate needs of PHP21.6 billion are required, the NDRRM Fund balances already fall short at PHP5.8 billion.”

This inadequacy is a wake-up call for government to “prioritize and recognize the fact that many needs or requirements [of devastated areas]will remain unfunded.” hampering full recovery from disasters.

While government can get dole-outs from other sources in times of disaster, “it has to go through a process of approvals that may be time-consuming and, therefore, affect recovery and reconstruction efforts,” Villacin said.

Using typhoons ‘Pablo’ in 2012 and ‘Yolanda’ in 2013 as case studies, Villacin noted the approved budget for the post-’Pablo’ rehabilitation was less than the estimated financing requirement.

While other funding sources from donors like UN and Red Cross have been beneficial, there were no monitoring systems to track projects already undertaken, she said.

The case is different for typhoon ‘Yolanda’ as the proposed budget was fully approved.

The problem was lack of communication and coordination among agencies and LGUs.

For example, some LGUs were not aware which projects were approved and status of funds and project implementation.

Villacin said another issue that must be addressed is integration of government’s DRFI instruments and mechanisms with the current legal and institutional environment in the country which, she said, “cannot be easily adopted.”

She noted the problem with ad hoc arrangements in government in terms of post-disaster response in recovery and reconstruction is lack of delineation of mandates or responsibilities.

For instance, she cited overlap in responsibilities between Department of Social Welfare and Development and National Housing Authority (NHA) in providing permanent shelter to disaster victims.

In terms of budget execution, procurement and absorptive capacity issues hinder timely and smooth implementation of projects in both cases, she said.

Villacin said length of the procurement process delays project implementation.

In construction and rehabilitation of roads and bridges, apart from lack of funds, Department of Public Works and Highways oftentimes experiences difficulties in processing budget requests and executions.

The same issues are also encountered in repair of school buildings, Villlacin said.

In terms of housing, problems revolve around flow of funds from national government to NHA, getting necessary permits, clearances, certifications and licenses for housing projects and lack of coordination among agencies, LGUs and stakeholders.

While these problems exist, Villacin took note of government initiatives like institutionalization of parametric insurance (which may be used for early recovery and emergency reconstruction) in Government Service Insurance System and the recently approved joint circular of Office of Civil Defense that aims to improve access to NDRRM Fund.

Villacin suggested studying features of Mexico’s DRFI – the FONDEN Fund – to address funding uncertainties, processes and procurement issues.

Under FONDEN, budget appropriations for disasters are pre-determined at the level of 0.4 percent of Mexico’s annual federal budget.

Also, it has pre-established channels for funds flow wherein budgets go directly to accounts of service providers that are implementing reconstruction works.

There is a built-in incentive structure for sub-national governments to encourage states to take responsibility of their own DRFI management.

PNA

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