Risk Layered Disaster Relief Finance Sector Development Program

proposed

The proposed Risk-Layered Disaster Relief Finance Sector Development Program supports the Kyrgyz Republic and Tajikistan to improve institutional capacity for effective disaster risk financing (DRF), establish DRF instruments within a risk-layered approach, and reduce fiscal strain in the aftermath of disasters, including geophysical hazards, extreme weather hazard events, and health emergencies. The sector development program (SDP) combines: (i) contingent disaster financing (CDF) a financing option under the Asian Development Bank (ADB) policy-based lending modality using primarily grant financing to drive policy reforms, removing underlying barriers, and enabling ex ante quick-disbursing liquidity facilities for disasters of higher frequency but lower severity; and (ii) an investment grant to develop and pilot a disaster relief bond (DRB), also known as a catastrophe bond, an insurance-linked security instrument placed by ADB in international capital markets, to provide quick liquidity following lower frequency but higher severity earthquake and flood events.