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Fiscal Resilience to Natural Disasters

Lessons from Country Experiences

image of Fiscal Resilience to Natural Disasters

Natural disasters continue to cause widespread damage and losses, with fast growing economies particularly exposed. Governments often shoulder a significant share of the costs of disaster recovery and reconstruction. This is true in OECD countries and even more so in developing economies, where private insurance markets are not as well developed. The fiscal impact of disasters on a government’s budget can be sizeable. Expenditures for the government arise from both explicit and implicit commitments to compensate for disaster losses. This report presents the results of a study that compares country practices in the management of the financial implications of disasters on government finances for a set of OECD member and partner countries particularly exposed to natural hazards.

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Boosting financial resilience against disasters: Towards better management of disaster-related contingent liabilities

This chapter offers governments a step-by-step guide to boosting financial resilience against disasters through better management of their disaster-related contingent liabilities. For each proposed step, this chapter presents and reflects upon the findings of practices obtained through the nine case studies. It shows how governments can assess disaster-related contingent liabilities and benefit from including the results in fiscal planning and fiscal risk assessment processes. The chapter highlights good practices and provides a discussion of the persisting challenges governments face in increasing their financial resilience to disasters.

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