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ADB Support to Boost Palau's Resilience to Natural Disasters

News from Country Offices | 16 October 2018

NGERULMUD, PALAU (16 October 2018) — The Asian Development Bank’s (ADB) Board of Directors has approved a $15 million policy-based loan to help strengthen Palau’s resilience to disasters by providing a predictable and quick-disbursing source of financing for early response, recovery, and reconstruction activities in the country.

The Palau Disaster Resilience Program will fill a financing gap experienced by the government in responding to recent major disasters, including tropical cyclones and droughts. The funds will be available for a three-year period (until December 2021) and drawn upon as needed if the President of Palau declares a state of emergency due to a natural disaster. The funds can be used flexibly to support short-term post-disaster activities as the government deems necessary. 

It also supports the implementation of the Palau Climate Change Policy for Climate and Disaster Resilient Low Emissions Development 2015. Over the past year, the government has taken steps to strengthen institutions for disaster and climate resilience, improve capacity and planning for disaster and climate risk management, and expand disaster risk financing. By completing 9 specific policy actions in these reform areas, the government is now eligible to access the contingent financing provided through the policy-based loan.

ADB has been making innovative use of policy-based loans and grants for disaster contingent financing since 2016. ADB supported the Cook Islands Disaster Resilience Program in 2016 and the regional Pacific Disaster Resilience Program in 2017. The Palau Disaster Resilience Program, which adopts design features from the earlier programs, is the first time ADB has provided disaster contingent financing to Palau.

“Palau is regularly exposed to natural hazards such as typhoons and droughts which threaten lives and livelihoods,” said ADB Principal Economist for the Pacific Ms. Ananya Basu. “The country’s first disaster contingent financing loan will allow the Government of Palau to finance post-disaster needs more quickly and flexibly.”

Palau joined ADB in 2003 and was classified as an ADB developing member country in December 2005. ADB has since committed loans totaling $69.7 million, a grant of $200,000, and six technical assistance projects worth $3.8 million for Palau.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.