Enhancing Resilience To Natural Disasters In Pacific Island Countries

Natural disasters and climate change are affecting Pacific small states to varying degrees. The widespread damage caused earlier this year by Cyclone Pam in Vanuatu is the latest reminder of
25 Jun 2015 12:16
Enhancing Resilience To Natural Disasters In Pacific Island Countries

Natural disasters and climate change are affecting Pacific small states to varying degrees.

The widespread damage caused earlier this year by Cyclone Pam in Vanuatu is the latest reminder of the challenge.

Beyond their devastating human impact, natural disasters damage economic activity and weaken countries’ fiscal positions.

These events not only take a toll on island economies in the short term, but they also lower growth prospects into the future and burden countries with higher levels of debt.



Recent analysis by the IMF staff suggests that natural disasters can cause economic growth to slow down by 0.7 percentage point for every 1 percentage point of GDP in damages and losses.

If they are to address this challenge successfully, Pacific island nations—many of which are small states with limited size, resources, and population—need the support of the international community.

That is the reason why the Governments of Fiji and the IMF are hosting the High-Level Dialogue on Enhancing Resilience to Natural Disasters in the Pacific Islands, with the financial support of the Government of Austalia.

The Dialogue, which opens on June 25 in Nadi, Fiji, provides an opportunity to listen to different perspectives on challenges, share ideas on how best to address them, and to learn from one another.

At the IMF, our focus on natural disasters in the Pacific is not new.

Also, we are not alone in scaling up our efforts in Pacific island countries.

We have partnered in recent years with other development partners and international financial institutions in identifying key areas of needed reforms and capacity building for policymakers.

During the UN Small Island Developing States conference in Samoa last September, we teamed up with the World Bank and other development partners to host an event focused on building economic resilience to natural disasters.

The high-level dialogue in Fiji will build on that discussion as we continue to find ways to develop and implement a more systematic approach to help countries deal with the increasing frequency and magnitude of these events.


Economical Policies

In order to limit the damages, resilience needs to be enhanced before the natural disasters strike.

Economic policies can play a vital role in dealing with all of the vulnerability caused by natural disasters, and this is where the IMF can help.

Our recent analysis shows that average per capita income growth is positively associated with periods of positive growth.

Hence one of the key messages is that the countries should focus on enhancing resilience to shocks and minimize periods of negative growth.

The Pacific island countries have spent a smaller proportion of their time experiencing positive growth (58 percent of the period 1980-2014) and average per capita growth in the Pacific islands during this period was 0.6 percent lower than their peers.

This underscores the need for these to build resilience to shocks, including natural disasters.



However, while good policies are key, a multi-pillar framework is needed at the national, regional, and multilateral level to enhance resilience to natural disasters.

It is also important to enhance countries’ risk-management capacities.

In addressing the problem of vulnerability to all sorts of external shocks, policy makers in the Pacific islands need to think about how to build and maintain appropriate levels of budget balances, public debt, and foreign reserves.

IMF experts work closely with governments to help achieve these goals.


Financial Assistance

Of course, the IMF is prepared to provide financial assistance when needed as in the recent case of Vanuatu when the IMF disbursed US$24 million to help the country cope with its immediate balance-of-payments needs and to catalyze critical donor support for the recovery after Cyclone Pam.

The IMF is also assisting the Pacific Islands by providing technical assistance and training to strengthen the disaster risk management capacity and public financial management systems, key aspects in building capacity to deal with natural disasters.

The Pacific Financial Technical Assistance Centre (PFTAC) has been instrumental to this effect.

For instance, the high-level dialogue will be preceded by a three-day workshop on strengthening fiscal frameworks, which will be attended by mid-career officials from Pacific island countries.

This “capacity development” is intended to align with the Fund’s policy advice and financial support.

This integrated approach is included in a set of guidelines on how the IMF can better serve and engage with small states in all key areas of its operations.

In a nutshell, through good policies, technical assistance and lending, the IMF stands ready to work with Pacific island countries with a complete toolkit and in strong collaboration with other development partners to help them overcome their developments challenges and build a prosperous future.

– Changyong Rhee, Director of the Asia and Pacific Department, International Monetary Funds

Five Square

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