This document discusses mechanisms for financing post-disaster recovery and reconstruction. It outlines different sources of domestic and external funding that can be utilized. Domestically, funding can come from reallocating budgets, issuing reconstruction bonds, levying taxes, private sector contributions, and insurance. Externally, funding sources include loans from multilateral development banks, reallocating development institution portfolios, multi-donor trust funds, debt relief, and risk insurance. The document also discusses options for disbursing recovery funds on or off government budgets and treasuries. Finally, it provides details on the International Federation of Red Cross and Red Crescent Societies' key financial instruments for recovery, including its Disaster Relief Emergency Fund and annual

1. +
Financing Post-disaster Recovery
and Reconstruction
Sudhir Kumar
Recovery and Disaster Risk Reduction Specialist
sudhir.ise@gmail.com

2. +
Objective
An overview of mechanism to finance post-disaster recovery and
reconstruction

3. + Understanding recovery
IFRC
- Recovery: Process that results in people’s lives returning to normal
in a way that they will be more resilient to future disasters.
- Early recovery: Process of people’s lives returning to normal in the
immediate aftermath of a disaster. Include assistance in the earliest
stages of response in conjunction with relief, ... providing the basis
for longer-term recovery.
 UNISDR
Restoration, and improvement where appropriate, of facilities,
livelihoods, and living conditions of disaster-affected communities,
including efforts to reduce disaster risk factors.

4. +
Recovery Financing

5. +
5
Recovery financing Source: World Bank & et al

6. + Domestic Funding Sources Source: World Bank & et al
 Reallocation among the budget items from “less” to “more”
disaster-hit sectors
 Issue of sovereign reconstruction or development bonds
 Levy of tax or surcharge for reconstruction
 Introduction of policy incentives for private sector to share
reconstruction costs
 Voluntary civil society and private philanthropies’ contributions
 Insurance

7. + External funding…contd.
 Credits or loans from multilateral development banks
 Reallocation of existing portfolio of international development
institutions
 Multi-donor Trust Funds
 Debt relief
 Ex-ante contingent component of standard investment operations
 Risk Insurance
 Standby financing
 Catastrophic Deferred Drawdown Option (Cat DDO)

8. +
Disbursement options
On budget on treasury
On budget off treasury
Off budget off treasury

9. +
Case:
IFRC’s recovery financing

10. + IFRC’s Key Financial instruments
Disaster Relief Emergency Fund (DREF)
 Provide immediate financial support to Red Cross Red Crescent National
Societies, enabling them to carry out their unique role as first responders
after a disaster.
 Available to all 187 National Societies, now has two main purposes:
Start-up funding to respond to large scale disasters – the “loan facility”
Funding for National Society responses to small- and medium-scale
disasters and health emergencies for which no international appeal will
be launched or when support from other actors is not foreseen – the
“grant facility”.
 Both the loan and the grant facilities are also used to help National Societies
pre- pare for imminent crises.

11. + IFRC’s Key Financial instruments
Appeal : Annual appeals and Emergency appeals
 The plan is launched at the beginning of each year to fund programmes that
meet an identified need that year. Programme updates and annual reports
report on these activities.
 Emergency appeals are issued during the year in response to disasters that
arise - their timeline is flexible. Operations updates, interim narratives &
financial reports and final reports report on these activities..