New disaster risk financing strategy in place in Indonesia

Recent natural disasters such as the earthquake and tsunami in Sulawesi has resulted in Indonesia adopting a new disaster risk financing and insurance strategy to better cope with the devastating impact of recurrent natural disasters.

Finance minister Mulyani Indrawati said recently that such an integrated strategy was critical to protect public assets and to accelerate recovery in a country where disasters between 2004 and 2013 caused sizeable material losses of around IDR126.7 trillion.

Speaking at a discussion during the IMF-World Bank meetings, the Indonesian finance minister said that, as part of the new strategy, the government would start insuring government buildings from next year.

World Bank Group president Jim Yong Kim, who also took part in the discussion, said Indonesia could tap other alternatives for its disaster financing needs such as the Southeast Asia Disaster Risk Insurance Facility which was launched earlier this year in collaboration with Japan.

He said that the Washington-based lender also had a pool of funds available for countries affected by a disaster, including a USD2.5 billion contingent credit facility.