Budgeting for Disaster Risk in the Philippines. Bureau of the Treasury

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1 Budgeting for Disaster Risk in the Philippines Bureau of the Treasury

2 Institutions of the Executive Branch Department of Budget and Management Budget preparation and execution Department of Finance (Bureau of the Treasury) Budget financing National Economic Development Authority Project approval Implementing Agencies Project preparation, proposal, implementation 2 2

3 Budget Release 1. Guidelines on release and utilization of funds 2. Implementing agencies submit budget execution documents 3. Limits on allotment and cash releases are set 4. Allotment Releases (authority to enter obligations) 5. Cash Allocation 6. Disbursement 3 3

4 President s s Message for 2013 Budget Disaster Preparedness and Prevention PHP7.5 Billion (~USD170 Million) Calamity Fund PHP3.9 Billion (~USD90 Million) Quick Response Fund PHP405 Million (~USD9.31 Million) budget for the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) PHP18.2 Billion (~USD418 Million) flood control projects PHP150 Million (~USD3.4 Million) water quality improvement in Manila Bay PHP360 Million (~USD8.2 Million) Pasig River Rehabilitation PHP983 Million (~USD22.6 Million) Solid Waste Management 4 4

5 Priorities of the Philippine Government Disaster Response and Rehabilitation Calamity Fund Quick Response Fund Typhoon and Flooding risk PAGASA Budget Flood control projects Solid waste management to avoid flooding 5 5

6 Budgetary items for Disaster Risk Budget takes its cues from Republic Act which mandated, among others, the mainstreaming of disaster risk reduction and climate change in development processes The Budget for disaster risk is mostly decentralized Most budgetary items are lodged in the different agencies own budgets. Flexibility in allocating fiscal space Realignments are frequently done within the year. For instance, QRF was increased by PHP1.1 Billion in mid-november 2013 Budget can also be increased through legislative action (proposed additional PHP14.6 Billion infusion to the Calamity Fund) 6 6

7 Budgetary items for Disaster Risk (2013) Major Classifications Understanding and Monitoring Hazards PAGASA - PHP405 Million Philippine Institute of Volcanology and Seismology (PHIVOLCS) PHP180 Million Unified Mapping Project of the National Mapping and Resource Authority (NAMRIA) PHP1.55 Billion Exposure Minimization Implementing Agencies infrastructure budget for construction, maintenance and repairs (i.e. disaster resilient roads, bridges, schools and hospitals) Resettlement Programs Early Response Mechanisms Relief and Reconstruction PHP7.5 Billion National Calamity Fund PHP3.9 Billion Quick Response Fund (QRF) Risk Transfer Insurance premiums Crop Insurance subsidy 7 7

8 Budgetary items for Disaster Risk (2013) National Calamity Fund Lump sum fund appropriated under the General Appropriations Act (GAA) covers aid, relief, and rehabilitation services to communities/areas affected by man-made and natural calamities as well as repair and reconstruction of permanent structures NOT a special account lodged in a bank. Can cover expenditures for disasters within the budget year or the preceding year Quick Response Fund built-in budgetary allocations that represent pre-disaster or standby funds for agencies in order to immediately assist areas stricken by catastrophes and crises. Used to be only a portion of calamity until 2012 where it became a separate line item. Recipients: Department of Public Works and Highways Department of National Defense Department of Education Department of Social Welfare and Development Department of Agriculture 8 8

9 Moving Forward The Philippines Government has relied mostly on its own internal resources to handle disaster risk Preference for physical investments rather than financial risk transfer Commitment to fiscal sustainability implies deferring reconstruction and rehabilitation. Concessional emergency loans will have to be paid by resources of the government. Department of Finance is keen on studying optimal disaster risk financing framework. Framework involves recognition that different risk categories require different ways of financing Rationalize yearly budgetary allocations to calamity fund and QRF Catastrophe risk model can provide access to parametric risk transfer instruments Traditional indemnity insurance usually takes too long and prone to damage assessment disagreements. 9 9