The World Bank says it has almost doubled the coverage of its natural disaster risk insurance for the Philippines.
The Washington-based institution said the Natural Disaster Risk Insurance had risen to US$390 million in coverage from the 2017 policy coverage of US$206 million against major typhoons and earthquakes.
The fund is designed to provide rapid liquidity for the authorities for rebuilding infrastructure and the economy.
Under the programme, the World Bank signs an agreement with private insurers to provide coverage for government agencies and 25 participating provinces.
“This initiative demonstrates the Philippines’ strong commitment to continue investing in innovative financial solutions that will mitigate the impacts of major earthquakes and extreme climate and weather-related events,” said Mara Warwick, the World Bank’s country director.
“The programme complements the country’s overall strategy and efforts in ensuring resilience against natural disasters and climate change.”
The global financial institution said the archipelago was one of the world’s most vulnerable countries to natural disasters and was expected to suffer US$3.5 billion in asset losses each year because of typhoons and earthquakes.
Since 2008, the World Bank has reportedly issued or hedged over US$4.3 billion in transactions to transfer earthquake, storm, drought and pandemic risks from its borrowing members to the capital markets.
After last year’s 5-per-cent fall in the peso and a growing deficit, consumer-price growth slowed last month and the currency and stock market rose, analysts say.
Growth was being forecast at over 6 per cent and reserves were some of the most healthy among the world’s emerging markets, Moody’s Investors Service reported.
“We’ve seen the worst in 2018. We are cautiously optimistic because we know we’re not there anymore,” said Jonathan Ravelas of BDO Unibank, based in Manila.
Manila’s stock index has risen more than 7 per cent this year, the biggest Asian gains.
“There’s more room for the peso to rebound, with sufficient reserve buffers and quite solid fundamentals,” Koji Fukaya of FPG Securities told Bloomberg.
The Philippines also has low foreign debt obligations. External debt payments due this year and total non-resident deposits over the next 12 months were estimated at 25 per cent of foreign reserves for this year, the lowest among 19 selected emerging markets, Moody’s said.
Overseas remittances, which form the backbone of the Philippine economy, amount to 10 per cent of gross domestic product. Remittances rose year on year by 2.8 per cent in November from a year ago, according to government figures.
The Philippines has been hammered by repeated environmental disasters. Picture credit: Wikimedia