(introduction...)

LEARNING OBJECTIVES

After reading this section and completing the exercises you will be able to:

· Describe eight different types of creative financing tools that can be used to enhance disaster recovery and pay for recovery project financing.

· Identify some of the counter productive aspects of various creative financing tools.

While disaster relief, rehabilitation, and mitigation may be economically, socially, and morally worthwhile, hard cash is required to permit implementation. As money is most likely to be limited, policy makers must identify and prioritize projects. Having obtained an idea of the scale of finance required to implement a relief, rehabilitation, or mitigation plan, funding options can be reviewed to determine the balance of foreign exchange and local currency costs that will be involved.

Eight alternative and complementary possibilities for developing disaster-related financing are reviewed below. First, the traditional financing route followed in developing countries is discussed. This typically involves NGO relief aid, followed by bilateral and multilateral assistance. After this discussion, seven separate types of “creative financing” possibilities are reviewed:

· debt swaps
· blocked funds
· trust funds
· triangular food aid
· disaster insurance
· revolving funds
· Central Bank assistance