The Unassuming Economist

From the IMF’s latest report on Sri Lanka:

“Sri Lanka has been prone to weather-related natural disasters, possibly reflecting climate change. While the government has started to build up resiliency against disasters by introducing disaster insurance schemes and increasing mitigation spending, it can further improve disaster preparedness by undertaking policy measures in the near term. First, a contingency budget for emergency cash support and infrastructure rehabilitation can be introduced within the budget. Second, the planned introduction of an automatic pricing mechanism for electricity, combined with well-targeted safety nets, can contain fiscal risks from droughts. Third, the risk management of disaster insurance schemes can be improved to maximize its effectiveness for post-disaster reconstruction while minimizing costs. Beyond the near term, there is a need to develop a comprehensive disaster risk financing strategy that is consistent with Sri Lanka’s debt sustainability, and build up capacity for innovative risk transfer approaches such as parametric insurance.”