The Department of the Interior and Local Government (DILG) proposes the pooling of the national calamity fund with the local calamity fund of local government units (LGUs) to ensure that resources would be readily available for emergency response as well as rehabilitation and reconstruction in the event of a disaster.

DILG Secretary Jesse Robredo said the proposed project dubbed as “Paluwagan para sa Paghahanda sa Kalamidad” is similar to the concept of saving for a “paluwagan,” an agreement in which members pool money at a scheduled time and take turns in receiving the pooled amount.

“This concept of disaster risk pooling has been successful in other countries,” he said.

Robredo said the larger funding mechanism that would merge the national and local calamity funds may be invested and leveraged in the capital markets through international reinsurance, contingent credit arrangements, or catastrophe bonds.

He said the merged fund will be independently managed by a third party fund manager, who is accountable to the national government and the local governments at the same time.

Robredo said that project will give LGUs better access to and discretion in the use of fund since the LGUs are in a better position to know which areas and sectors badly needed disaster intervention.

“It is a better alternative to the existing set-up where financing for calamities and disasters are largely disbursed through National Government Agencies (NGAs) which also have their own priorities,” he said.

Robredo said the amounts paid into the pool by participating LGUs may be a fixed percentage of their calamity funds or may depend on their individual exposure to the covered hazards.

Under the proposal, the guidelines for the use of the pool of funds may be governed by the Philippine Disaster Risk Reduction and Management (DRRM) Act of 2010, and the Department of Finance may serve as an oversight agency.

Robredo said although the DRRM law broadened the use of the local calamity funds to include disaster preparedness and training, these are insufficient particularly in disaster-prone LGUs that usually experience two disasters in a year.

“The national calamity fund is inadequate and access to it by LGUs is limited.”

The World Bank-assisted Post Disaster Needs Assessment (PDNA) quantified Philippine damages and losses sustained in the aftermath of typhoons Ondoy and Pepeng at Php 206-Billion (US$4.38B).###