Stories of Impact A series highlighting achievements in disaster risk management Amplifying Serbia’s Financial Resilience Against Natural Hazards REGION: EUROPE AND CENTRAL ASIA PROJECT DESCRIPTION: FOCUS: FINANCIAL PROTECTION COUNTRY: SERBIA In May 2014, Serbia experienced its most severe flooding in more than a century, affecting 22% of its population, displacing 32,000 families and claiming 57 lives. A Recovery Needs Assessment supported by the Global Facility for Disaster Reduction and Recovery (GFDRR) also revealed that in a matter of weeks, an estimated 125,000 people fell below the poverty line, illustrating the country’s vulnerability to extreme weather events. RESULTS: • GFDRR and the World Bank supported the Today, Serbia is better equipped to cope with hazard-related establishment of the National Disaster Risk shocks and is able to streamline recovery efforts after a Management Program (NDRMP), an umbrella framework which has managed more than disaster. With support from GFDRR, the World Bank, the $80 million to strengthen crisis management European Union, the United Nations, and the Swiss Agency systems, inform risk reduction interventions, and implement measures to better absorb fiscal for Development and Cooperation, Serbia has adopted shocks caused by natural disasters. one of the most comprehensive approaches to managing • GFDRR technical assistance informed the Law disaster risks: the National Disaster Risk Management on Reconstruction following Natural and other Program (NDRMP). Recently, Serbia complemented that Hazards, which reformed Serbia’s assistance and reconstruction system and introduced the program with the National Disaster Risk Financing and “build back better” concept, in line with the Insurance (DRFI) Strategy to respond more effectively to the Sendai Framework for Disaster Risk Reduction. financial impacts of disasters. • Serbia has recently secured a Disaster Risk Management Development Policy Loan with a Catastrophic Deferred Drawdown Option (Cat-DDO), helping the country to access a contingent credit line of up to $70 million in rapid liquidity to directly support affected municipalities in the aftermath of a catastrophe without disrupting long-term development efforts. CONTEXT: In recent years, Serbia has been severely affected by disasters and has suffered widespread damage. The 2014 floods alone affected 1.6 million people and resulted in damages equivalent to 4.8% of the country’s GDP. Serbia is also facing the rising costs of responding to disaster challenges, as weather-related events are becoming more frequent and intense. For example, the recovery and reconstruction needs following the 2014 floods contributed to the onset of a recession and were estimated to be nearly $1.5 billion. Yet, even with a robust approach to DRM, Serbia could still be exposed to budget shocks caused by a major disaster, which could erode its development gains and socio-economic stability. APPROACH: GFDRR, the World Bank, and other partners are supporting the Government of Serbia in shifting how the country addresses natural disasters, moving from disaster response to proactive risk management. Building on its National DRFI strategy, Serbia will take advantage of the Cat-DDO – the first mechanism of its kind in the Europe and Central Asia Region – to better manage budget volatility associated with disasters. This innovative “The Cat-DDO is a rapid and agile financing instrument can be triggered after a government declares a state instrument that contributes to Serbia’s proactive of emergency, such as after massive flooding. It will allow the approach to disaster risk management. This government to respond quickly to emergency needs by supporting innovative instrument will help Serbia strengthen transparent and efficient post-disaster damages assessments its financial resilience by accessing rapid liquidity of public infrastructure and mobilizing immediate post-disaster for recovery and reconstruction, and to better funding, without disrupting ongoing resources from longer-term anticipate budget deviations generated by development programs. For example, 15 percent of local self- extreme weather events.” government units will be able to use the post-disaster loss and Dušan Vujović, Minister of Finance of Serbia needs assessment methodology, which will accelerate potential recovery and reconstruction efforts. Photo by Goran.Smith2 via Wikimedia Commons NEXT STEPS: GFDRR and World Bank support has helped strengthen Serbia’s LESSONS LEARNED: DRM capacity but more remains to be done. Moving forward, DRM Strengthening preparedness and hazard monitoring engagement in Serbia will: require a systematic approach. There were no adequate systems in place during the 2014 floods to respond to the • Accompany the implementation of the National DRFI Strategy overwhelming needs in a coordinated manner. Serbia has by establishing a fiscal risk unit within the Ministry of Finance improved its crisis management system to improve the to coordinate efforts to minimize post-disaster fiscal burdens. safety of citizens and maximize the protection of assets by • Strengthen its legal and institutional framework to improve reviewing information flows of its early warning systems decision-making – both locally and nationally – for post- and ensuring that emergency response is based on disaster reconstruction and harmonize disaster risk adequate rescue and protection plans. management investments. • Improve access to and accuracy of risk information by Risk-informed principles are essential for shaping a creating an open-source geospatial platform and conducting a resilient and sustainable recovery. The 2014 floods revealed national flood risk assessment. striking examples of risk-creating infrastructures such as bridges built without hydrological and geomechanical surveys. Recognizing that no single agency can be solely responsible for generating, sharing, and using hazard and risk information, Serbia is taking steps, with support from Contact GFDRR and the World Bank, toward strengthening its Elif Ayhan eayhan@worldbank.org policies and institutions for risks assessments and risk Learn more at www.gfdrr.org *ALL MONETARY VALUES IN USD identification.