$500 Million ADB Loan to Help Boost Indonesia’s Disaster Resilience
The Asian Development Bank (ADB) has approved a $500-million loan to provide Indonesia with quick access to emergency financing in the event of disasters caused by natural hazards and disease outbreaks, such as the coronavirus disease (COVID-19) pandemic.
“Indonesia is located in the Pacific Ring of Fire and is highly vulnerable to a range of natural hazards including earthquakes, tsunamis, volcanic eruptions, landslides, floods, and droughts, and now COVID-19,” said ADB Vice-President Ahmed M. Saeed. “This policy-based loan will help the government initiate a timely response to such shocks and reduce the economic and social impacts on public infrastructure and people’s livelihoods, especially among the poor and women.”
Disaster risk management reforms
The Disaster Resilience Improvement Program, which offers contingent disaster financing following disaster or health emergency declarations, supports Indonesia’s reforms in disaster risk management and health services, as well as efforts to improve disaster resilience among the country’s institutions and communities.
“The program aims to help the government boost environmental sustainability, disaster and climate resilience, and human capital development, including health and gender equality,” said ADB Financial Sector Specialist Benita Ainabe. “It will help the government develop recovery and reconstruction plans with greater certainty, reduce infrastructure damage, and prevent the loss of life in future disasters.”
The program will focus on three key reform areas: strengthening government policies and action plans that respond to disasters and health-related emergencies, including social protection; increasing the resilience of public infrastructure to disaster and climate risks and thereby reducing replacement or restoration costs; and increasing financing for disaster risk and pandemic response through insurance, improved health care, and targeted social spending.
The reforms supported by ADB will increase the share of disaster risk management in the national budget to 1%, up from 0.04% in 2019; improve disaster response coordination across key ministries; and expand the protection of vulnerable groups following disasters and pandemics.
The program reflects the priority of addressing climate change and disaster risk mitigation in ADB’s new 2020–2024 country partnership strategy for Indonesia. It will complement ADB’s $1.5-billion COVID-19 Active Response and Expenditure Support (CARES) Program for Indonesia, which is supporting the government’s response to the pandemic. ADB has also provided a $3-million grant under the Asia Pacific Disaster Response Fund to help the government procure critical medical equipment and supplies.
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 68 members—49 from the region.