Increasing disaster risk financing (DRF) in participating DMCs is critical to reduce negative impacts on lives, livelihoods, and economic and fiscal outcomes. The program contributed to significantly higher pre-disaster financing, helping to partially fill gaps following a disaster event. Three aspects could be further explored. First, CDF was created for medium-scale disaster events that occur about every 3–10 years, whereas, in practice, qualifying events in the Pacific have occurred with greater frequency and led to higher levels of damages in certain countries. This suggests the need to further explore to what extent and how DRF gaps should be addressed, including, but not exclusively, through CDF. Second, the availability of pre-disaster financing can be highly volatile, subject to the frequency and impact of disaster events, with CDF (and the World Bank’s Catastrophe Deferred Drawdown Option) playing a major role because of their volume. Following a drawdown, policy dialogue, reform Implementation, and administrative processing of a new phase take several months, during which DMCs are financially exposed if the gap is not filled from other sources. The 2022 CDF policy change helped to address these issues by introducing a fast-tracked replenishment option. In addition, DMCs could benefit from improved capacity to strategically approach DRF by coordinating the availability of various instruments and linking that with their fiscal risk management, planning, and budgeting. Third, providing CDF on a loan basis to highly risk exposed, small DMCs could be revisited, with Samoa delaying the drawdown of the loan portion to the end of the first phase, while Vanuatu—part of the concept paper in the first phase—opted out of the program because of the loan portion.
Pacific Disaster Resilience Program (Phases 1 and 2)