This document summarizes a presentation about disaster risk financing and policy-based lending in the Cook Islands. The Cook Islands faces high risks from natural disasters like cyclones due to its geography across multiple small islands. It has taken out an ADB loan to improve disaster resilience through policy reforms. The $13.95 million loan over 3 years supports strengthening disaster management institutions and plans, increasing the resilience of infrastructure, and expanding disaster risk financing instruments. It will be implemented through agreed policy actions and reforms focused on improving preparedness, response, and recovery capabilities in the Cook Islands.

1. DISASTER CONTINGENT
FINANCING AND POLICY-BASED
LENDING
Presented by: Melinda Pierre
Title: Development Programme Manager
Development Coordination Division, Ministry of Finance and Economic Management, Cook Islands Government

2. BACKGROUND OF THE COOK ISLANDS
• Resident population of about 14,974
• Covering a land area of 67 square kilometres over 2million square
kilometres of the South Pacific Ocean
• Tourism led Economy
• High risk from natural hazards, particularly cyclones, tsunamis, and
floods.
• Experienced major cyclones that have caused substantial economic
damage and loss of life

3. DISASTER RISK COUNTRY
• The Tropical Cyclone Pat 2010 response highlighted the inefficiency of
our Government Agencies to respond immediately. Emergency
Management Cook Islands (EMCI) and Government officials were
heavily criticised for the delayed response by key ministries from
Rarotonga (main island).
• The geographical spread of the population spread across 15 islands
makes initial disaster response to the outer islands (Pa Enua)
expensive and further burdens public finances.
• To reduce risks from, better plan for, respond to, and recover from
disasters, the country has and is still currently taking important steps
to improve its disaster risk management system.

4. COOK ISLANDS NATIONAL SUSTAINABLE
DEVELOPMENT PLAN 2016-2020
• Goal 13 – Strengthen resilience to combat the impacts of climate change and natural disasters
Promote resilient communities
Indicator 13.1 Resilience Index
- The main of disaster risk mitigation efforts is to reduce the overall vulnerability of our island communities.
We have developed a resilience index which assesses efforts to reduce the relative vulnerability of each
island
Enhance protection from cyclones
Indicator 13.2 Percentage of population that have access to protection from category 3 or higher cyclones
- The greatest risk that cyclones present to us is the loss of life. Never was this more apparent than in 1997
when cyclone Martin hit Manihiki taking twenty lives. We must mitigate against this risk ensuring all
communities have access to designated cyclone shelters built to cyclone standards
Build resilient infrastructure
Indicator 13.3 Percentage of public buildings and infrastructure which it is built upon. As a nation, we must be
proactive in future-proofing our infrastructure and public building against the impacts of climate change and
natural disasters

5. COOK ISLANDS GOVERNMENT RESPONSE
AND REFORM EFFORTS
• The current National Sustainable Development Plan 2016-2020 (“Te
Kaveinga Nui”)
• Disaster emergency trust fund – established in 2011 with a current balance
of NZ$1.5million
• The Government has also taken out insurance coverage under the Pacific
Catastrophe Risk Assessment and Financing Initiative (PCRAFI) for cyclones
• The Disaster Risk Management Act 2007
However, this is still insufficient for the Government of the Cook Islands to
finance the cost of short-term recovery needs following a significant disaster

6. ADB LOAN TO IMPROVE COOK ISLANDS’
DISASTER RESILIENCE
• The Government of the Cook Islands requested financial assistance
from the Asian Development Bank (ADB) for the Disaster Resilience
Program to help better manage the fiscal risk arising from disasters.
• In 2016 ADB developed a “Concept Paper,” “Report and
Recommendation” and finally a “Loan Agreement” was signed in
December 2016 (Policy-Based Loan)
• The proposed program would support the government’s continuing
efforts to improve disaster resilience through a series of reform
initiatives.

7. ADB LOAN TO IMPROVE COOK ISLANDS’
DISASTER RESILIENCE….cont’d
• First for the Pacific Region
• Loan Agreement signed December 2016
• NZD$13.95million
• Annual Interest 0.60%
• Commitment charge 0.15% p.a
• Interest and other charges payable on 01 April and 01 October in each year
• Three year period (Dec 2016-2019)

8. Implementation Arrangements
• The Ministry of Finance and Economic Management (Execute and Implement)
Office of the Prime Minister, Emergency Management Cook Islands, and the
Infrastructure Cook Islands (Supporting Role)
• Cabinets Role
• Policy Actions
• Implementation date (December 2019)
• Flexibility
• Eligibility
• Consultation between Government and ADB
• ADB to continually monitor agreed policy actions (Policy Matrix)
• Loan Draw Down as per ADB Loan Disbursement Handbook

9. OUTPUTS POLICY ACTIONS BY DECEMBER 2016
1. Strengthened policy and
institutional arrangements for disaster
risk management
1.1 National Development Plan incorporating disaster resilience that is gender inclusive approved by Cabinet
1.2 Public consultations on the second JNAP for disaster risk management and climate change adaptation completed
1.3 Two meetings of the National Disaster Risk Management Council held in 2016
1.4 Local disaster risk management plans prepared for the 10 outer islands, and 10 punas of Rarotonga
1.5 Learning modules on disaster risk management prepared for integration into the school curriculum and phased dissemination to schools
throughout the country
1.6 Commencing development of training modules targeting key areas of DRM accountabilities relevant to each government agency, in
support of EMCI’s mandate under the DRM Act 2007
2. Improved resilience of physical
assets to disaster and climate risks
2.1 Availability and price of services and goods for post-disaster clean-up and the restoration of essential services in the event of a disaster
confirmed by registered contractors
2.2 Commenced development of a damage and loss database (including sex-disaggregated information) and a tracking system for post-
disaster expenditures
2.3 Priority infrastructure to reduce climate and disaster risks identified in national infrastructure development plan
2.4 Analysis of disaster and climate risks required for all proposed public investment projects over NZD$150,000
2.5 Negotiations started with service provider to draft a revised building code that sets standards for disaster resilience in physical assets as
appropriate.
3. Expanded range of instruments for
disaster risk financing
3.1 Additional financial resources committed to the disaster response trust fund through the FY2017 budget
3.2 Continued commitment to PCRAFI through allocation for annual insurance premium in the FY2017 budget
POLICY MATRIX

10. KEY LESSONS LEARNT
• Appoint a coordinator within Government
• Take ownership of the “policy matrix”
• Drive what is achievable for your country
• Ensure there are other options available

11. MEITAKI MA’ATA