WWW.GFDRR.0RG Stories of Impact A series highlighting achievements in disaster risk management initiatives Building Financial Resilience against Natural Hazards in Panama REGION: LATIN AMERICA AND THE CARIBBEAN RESULTS & ACHIEVEMENTS COUNTRY PANAMA GFDRR support started in 2010 and coincided with a $66 million World Panama is a driver of economic growth in Central Bank loan designed and disbursed America and the Caribbean. The capital, Panama City, in 2011 to strengthen the coun- is the region's major financial and transportation hub, try's ability to promptly bridge the liquidity gap that can emerge in the la le to tPan aal. It is als la wake of a natural disaster. earthquakes, windstorms, wildfires, and storm surges, * GFDRR has been instrumental in which threaten the country's infrastructure and helping proactive municipalities, economic assets. like the city of David, move forward with risk-based planning. In David, The Government of Panama has been working with a CAPRA seismic risk assessment the World Bank and the Global Facility for Disaster was completed for houses, schools, Reduction and Recovery (GFDRR] since 2010 to develop and hospitals, which is now being and implement a strategy to effectively manage the used by local and national officials financial impact of natural disasters. Leveraging the to inform public investments, such as the structural reinformecement of the most vulnerable buildings. risk hnancing, Panama has carried out a thorough public sector reform. A dedicated unit was established * In 2014 Panama implemented a within the Ministry of Economy and Finance to inform comprehensive framework for public policies on disaster risk management and engage disaster risk financing and insur- relevant stakeholders. ance, becoming the first country in the world to adopt such a strategic framework: other Latin American countries have expressed interest in following the country's example. f a transpORANKUb largydt th aaa aa.I isOalso highly U Context A high proportion of Panama's low-income population LESSONS LEARNED lives in areas most exposed to natural hazards, which Collaboration is critical to provide clients with feature poorly designed structures. The ineffective comprehensive solutions for disaster risk financing. This enforcement of national and local land use regulations, engagement is a result or continuous collaboration across uncertainty about compliance with building codes, rapid the World Bank Group and external partners to foster demographic growth, and unplanned urban and industrial financial resilience to natural hazards. GFDRR's partners expansion are key drivers contributing to increased have included the United Nations Ofce for Disaster vulnerability. At the same time, the country has seen Risk Reduction in the Americas, the Inter-American large amounts of foreign direct investment, infrastructure Development Bank, the International Monetary Fund, and transportation systems built, and new housing and and the Central American Integration System ror Natural tourism projects developed. Urban areas where trade Disaster Prevention. This approach has been essential and financial services are concentrated account for 43% i of GDP and over 80% of the country's total exports. The incizing t Srtict Pnma Panama Canal has been expanded to further open the wiin nedsinsuch a Tabl edte unt country to trade. Damages to the Panama Canal alone caused by natural disasters could disrupt international to effectively facilitate the decision-making process transportation networks and negatively impact further around disaster risk management initiatives as previously growth of Panama's economy. fragmented responsibilities have become centralized. A national policy promoting integrated disaster risk Approach management is crucial to spur reforms. Integrated Following a torrential rainfall in December 2010 that solutions acknowledge that disaster risk financing and caused a declaration of national emergency, Panama insurance is only one pillar or a country's national disaster undertook a series of efforts to better understand its risk management framework and should be complemented level of disaster risk and develop strategies to become by risk analysis, risk reduction, disaster preparedness, more resilient against disaster shocks. In November 2014, and recovery and reconstruction arter disasters. This a Presidential Decree setting out a National Strategic latest national policy contained a component on financial Framework for the Financial Management of Disaster Risk management of natural disasters that was crucial ror was approved, making Panama the first country in the sustaining Panama's commitment to rormulate and adopt world to enact such a law. the Strategic Framework despite changes within the The adoption framework represents the culmination of Government rollowing an election. a series of public reforms, consultations, and studies undertaken by the Government of Panama in recent years. These efforts have created a strong legal mandate Next Steps for establishing a financial management strategy that addresses natural disasters.WolBakndGRRegem tpvdthwaFr addrssesnatual dsastrs.institutional reforms that led to the enactment of a law The framework is forging a nationwide consensus to setting out a strategic framework for the management of pursue evidence-driven disaster risk reduction, improve disaster risk. Starting in 2015, the country will implement budget planning and invest in disaster risk management. this framework through a five-year operational plan. As part This also includes looking at ways to increase financial of this process, risk analysis will be thoroughly inserted into resilience. GFDRR helped Panama early on to find ways public investment planning and public expenditure on risk to improve decision-making and risk management. For management will be monitored. Furthermore, risk retention example, GFDRR made open-source, multi-hazard disaster and transfer instruments are planned to be developed. risk analysis tools available to strengthen the capacity of Panama's policymakers to integrate risk information into the development planning process. "This National Strategic Framework for Disaster Risk Financing and Insurance provides a model of best practice for theefinancial management of disaster risk, reflecting Panamas commitment to improve its resilience to natural hazards. It has the potential to encourage similar developments in other countries and regions." -Dulcido e ila Guardia Minister of Economy and Finance, Panama Contact Shaela Rahman I Washington. DC srahman@worldbank.org n +1c202-458-0283 www.gfdrr.org *All hgures in US Dollars