Keep specific allocations for rescue operations

Instead of keeping funds in the form of block allocations, the finance ministry has been requested to keep specific budgetary allocations to carry out rescue operations in case of disaster-related emergencies, officials say.
It has also been requested to keep allocations for fiscal rescue operations if any financial sector-related incident takes place.
The request was made at a meeting on the National Strategy for Disaster Risk Financing (NSDRF), held at the Ministry of Disaster Management and Relief on Monday, sources say.
Officials say the expansion of insurance coverage, especially for the crops and assets at risk in case of disastrous events, and the incorporation of national disaster risks in the fiscal projection were also discussed at the meeting.
They say the government presently keeps some block allocations in the budget to meet funding needs in case of an emergency.
The meeting participants underscored the need for keeping budgetary allocations in more formal ways or under specific heads as the number of disastrous events is increasing over the years.
They said major flooding occurs in Bangladesh every three years and the economy faces a catastrophe as crops are damaged and various other properties are destroyed.
Also, earthquake-like events are occurring frequently nowadays, posing greater risks.
The meeting was told that Bangladesh faces frequent natural disasters like cyclones, floods, and earthquakes, and it is also the seventh disaster-affected country in the world.
The disastrous events are causing significant economic damage and loss of lives.
However, the country lacks robust financial mechanisms to address these disasters.
The meeting was also told that the recent disasters highlighted the need for improved financial preparedness.
On average, the annual cost of response to disastrous events is around $810 million.
Any larger but less frequent event can cause significant funding gaps when it comes to facing the emergency.
The NSDRF emphasised the need for enhanced financial preparedness and response, integrating disaster risk financing into financial policies and practices and building resilience for a smart Bangladesh by 2041.
It also stressed that the government should strengthen its financing capacity to respond to future shocks of varying frequencies and severity by expanding its suite of instruments.
Moreover, it underscored the need for building robust fiscal buffers, as well as increasing the efficiency and efficacy of funds channelled as relief to disaster-affected households through social assistance programmes.
Evaluating institutions like microfinance institutions, cooperatives, banks, and insurance companies for disaster risk financing solutions; identifying and promoting  successful private sector initiatives in disaster risk financing; insurance for high-rise buildings and public-private partnerships; introducing loan-linked insurance to encourage risk mitigation and preparedness; and exploring sovereign disaster insurance schemes for large-scale events were also emphasised.
A senior Finance Division official told The Financial Express Tuesday the issue of natural disaster impacts had already been included in the Medium-term Macroeconomic Policy Statement.
"More effective steps have to be taken for disaster risk reduction and successful disaster risk financing," he said.
syful-islam@outlook.com