REJAUL KARIM BYRON

Bangladesh’s vulnerability to natural disasters has placed significant strain on its economy and financial resources, with about $5 billion needed in the short term for relief and early recovery, according to the International Monetary Fund.

About $15 billion is required for reconstruction in the medium term, said the technical assistance report titled “Bangladesh: Disaster Risk Financing” unveiled yesterday.

Between 2000 and 2003, disasters caused an estimated $13.6 billion in damages, affecting 130 million people.

Subsequently, there is a pressing need for enhanced financial mechanisms to address medium-term recovery and reconstruction efforts.

“Disasters in Bangladesh have profound economic impacts, affecting agriculture by destroying crops and fisheries, disrupting industries, damaging infrastructure like roads and buildings, and leading to loss of lives and displacement of people,” the report said.

The country being in the low-lying delta region makes it particularly vulnerable to these disasters.

The total funding needed in response to a repeated event that occurs once every two years is estimated at $4.7 billion, which is about 1 percent of annual GDP.

This comprises immediate response and early recovery efforts, including food, shelter, health, and income recovery support for floods and cyclones of $1.2 billion and medium-term costs for rehabilitation and reconstruction of $3.5 billion.

The total resource requirements are expected to increase significantly for more severe natural disasters such as those that occur once in 50 years.

The needs would amount to $20 billion or about 4 percent of annual GDP and are comparable in magnitudes to the 2004 floods and the 2007 Cyclone Sidr in terms of the share of GDP.

With the policy mechanisms that are already in place, as much as $1.5 billion can be mobilised for the immediate response and early recovery phase of disaster response.

However, for moderate disasters such as those occurring every three to five years, the government faces a financing gap.

For a one-in-five-year disaster event with a 20 percent chance of occurrence in a year, the financing gap for immediate relief and early recovery is $0.9 billion, and the mid-term reconstruction financing gap is $4 billion.

For catastrophic disaster events, the financing gap increases significantly -- a one-in-fifty-year disaster event leads to a short-term financing gap of $3.5 billion and a reconstruction financing gap of $11.8 billion.

The IMF report emphasises the importance of strengthening fiscal policy mechanisms to close these gaps.

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