Bangladesh: Technical Assistance Report-Disaster Risk Financing

TECHNICAL ASSISTANCEREPORT BANGLADESH Disaster Risk Financing October 2024 Prepared BySuphachol Suphachalasai, Barry Maher,Danielle Minnett, and Junko Mochizuki Fiscal Affairs Department The contents of this document constitute technical advice provided by the staff of the InternationalMonetary Fund to the authorities of Bangladesh (the "CD recipient") in response to their request fortechnical assistance. Unless the CD recipient specifically objects to such disclosure, this document (inwhole or in part) or summaries thereof may be disclosed by the IMF to the IMF Executive Director forBangladesh, to other IMF Executive Directors and members of their staff, as well as to other agencies orinstrumentalities of the CD recipient, and upon their request, to World Bank staff, and other technicalassistance providers and donors with legitimate interest (seeStaff Operational Guidance on theDissemination of Capacity Development Information). Publication or Disclosure of this report (in whole orin part) to parties outside the IMF other than agencies or instrumentalities of the CD recipient, World Bankstaff, other technical assistance providers and donors with legitimate interest shall require the explicitconsent of the CD recipient and the IMF’s Fiscal Affairs department. The analysis and policy considerations expressed in this publication are those of the IMF Fiscal AffairsDepartment. Contents Recommendations ....................................................................................................................................12 I. Context ....................................................................................................................................................14 II. Disaster Risk Financing Gap ...............................................................................................................21 A. Disaster Risk Financing Needs ..............................................................................................................21B. Financing Gap Analysis ..........................................................................................................................25 III. Fiscal Policy Response to Disaster Risks.........................................................................................28 A. Landscape of Fiscal Policy Response to Disaster Risks........................................................................28B. Assessment of Policy Gap......................................................................................................................36 IV. Shock-Responsive Social Protection ................................................................................................40 A. Landscape of Social Programs for Disaster Response..........................................................................40B. Assessment of Policy Gap......................................................................................................................47 A. Landscape of Financial Policy Response to Disaster Risks...................................................................53B. Role of the Domestic Financial Sector Including Private Actors ............................................................55C. Assessment of Policy Gap......................................................................................................................61 A. Landscape of Institutional and Legal Framework ...................................................................................64 Boxes 1. Risk Layering in the Philippines ..............................................................................................................282. IMF's Rapid Credit Facility ......................................................................................................................333. The Catastrophe Containment and Relief Trust (CCRT)........................................................................344. Brazil’s Social Registry............................................................................................................................475. Kenya’s Hunger Safety Net Program (HSNP) Scalability Framework ....................................................496. Sovereign Catastrophe Risk Management Instruments in Philippines ...................................................557. Private Sector Engagement in Disaster Preparedness and Relief in Japan ..........................................578. Bundling of Agricultural Credit and Insurance in India............................................................................599. Public-Private Partnership for Disaster Insurance ..................................................................................60 Figures 1. Cyclone Flood and Earthquake Hazard Maps in Bangladesh ................................................................14 2. Drought, Salinity, and Landslide Hazard Maps in Bangladesh...................................