Mobilizing financial resources for disaster prevention

(Baonghean.vn) - On November 15, in Hanoi, the Ministry of Finance coordinated with the World Bank (WB) to organize a workshop on "Financial solutions for natural disaster risks in Vietnam".

Vietnam is a country that is subject to many natural disasters in the Asia-Pacific region such as storms, floods, droughts, tornadoes, landslides, etc., causing huge losses in human lives and the economy. In recent years, the National Assembly and the Government of Vietnam have always focused on developing and implementing a system of strategies, plans, policies and solutions for preventing, combating and mitigating natural disasters. In particular, regarding financial policies and solutions, the Budget Law has stipulated that the state budget reserve and financial reserves are used for the needs of preventing, combating and overcoming the consequences of natural disasters. The current system of financial solutions has basically met the requirements for emergency support and disaster recovery expenses, ensuring rapid stabilization of production and people's lives.

Several sections of road in Quy Chau were destroyed by the flood in September 2016. According to the report of the People's Committee of Quy Chau district, the flash flood that occurred in the early morning of September 14 killed one person, swept away and completely collapsed 4 houses, and severely flooded 240 other houses. Nearly 180 hectares of ponds and lakes were flooded and broken; 19 poultry cages and thousands of livestock were swept away; 463 households lacked clean water for daily activities. Photo: Archive

However, natural disasters and climate change are becoming more and more complex and unpredictable. According to the World Bank's estimates, the damage caused by natural disasters can reach 3.6% and 4.1% of GDP for natural disasters with a frequency of 1/100 and 1/200 years). In the event of a disaster, the state budget will face many difficulties in supporting and overcoming the consequences of natural disasters. It is very necessary to build and develop new financial solutions for risk management and transfer of natural disaster risks, in which insurance solutions are an effective tool and solution, not only reducing the burden on the state budget, transferring risks to the international market but also contributing to raising awareness of natural disaster risks, planning and preventing and combating natural disasters.

For that reason, the technical support on financial and insurance solutions for disaster risk prevention directly implemented by the World Bank with the main funding from the Swiss Government is very valuable. This workshop is a forum for open and frank exchange and sharing on solutions to promote disaster insurance activities, which have not yet been deployed and penetrated much in Vietnam.

Speaking at the workshop, World Bank Lead Economist for Vietnam - Mr. Sebastian Eckardt said: “Vietnam is one of the countries affected by natural disasters and climate change, leading to serious economic losses, in which the poor are the most affected. A strategic approach to improving the country's resilience to such shocks will help ensure the safety of people's livelihoods and help sustain economic growth and development progress. Supporting the development of this strategy is one of the priorities of the World Bank in its cooperation with the Government of Vietnam”.

Overview of the conference.

The opinions discussed on the financial protection tools for natural disaster risks currently used by the Government as well as international experience related to financial solutions for natural disaster risks of the delegates all agreed that the Vietnamese Government can choose a number of solutions such as: building an economically effective financial protection strategy based on the optimal combination of financial tools, contingency budgets, natural disaster reserve funds, reserve credit sources, risk transfer tools to ensure that financial resources are used appropriately. In particular, natural disaster finance is part of the overall program on natural disaster risk management and climate change, supplementing investment activities to prevent and reduce risks; Reviewing policy frameworks, laws, institutions and operations of natural disaster prevention funds to enhance the financial resilience of localities.

Red River