Fiscal Buffers for Natural Disasters in Pacific Island Countries

By Hidetaka Nishizawa, Scott Roger, Huan Zhang

July 12, 2019

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Hidetaka Nishizawa, Scott Roger, and Huan Zhang. Fiscal Buffers for Natural Disasters in Pacific Island Countries, (USA: International Monetary Fund, 2019) accessed July 17, 2025

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Pacific island countries (PICs) are vulnerable severe natural disasters, especially cyclones, inflicting large losses on their economies. In the aftermath of disasters, PIC governments face revenue losses and spending pressures to address post-disaster relief and recovery efforts. This paper estimates the effects of severe natural disasters on fiscal revenues and expenditure in PICs. These are combined with information on the frequency of large disasters to calculate the rate of budgetary savings needed to build appropriate fiscal buffers. Fiscal buffers provide self-insurance against natural disaster shocks and facilitate quick disbursement for recovery and relief efforts, and protection of spending on essential services and infrastructure. The estimates can provide a benchmark for policymakers, and should be adjusted to take into account other sources of financing, as well as budget risks from less severe as well as more frequent disasters.

Subject: Budget planning and preparation, Disaster aid, Environment, Expenditure, Fiscal policy, Fiscal space, Foreign aid, Natural disasters, Public financial management (PFM)

Keywords: Budget planning and preparation, Contingent government liability, Disaster aid, Financial support, Fiscal Buffers, Fiscal Cost, Fiscal space, Government cash buffer, Government expenditure, Government financing source, Natural Disasters, Pacific Islands, Pacific Islands Countries, PIC government, Private sector, Real GDP, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/152
Stock No:

WPIEA2019152
ISBN:

9781498320801
ISSN:

1018-5941

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