## Fiscal Buffers for Natural Disasters in Pacific Island Countries

_IMF Working Papers, July 12, 2019_

## Source details

**Canonical URL:** [Fiscal Buffers for Natural Disasters in Pacific Island Countries](https://www.imf.org/en/publications/wp/issues/2019/07/12/fiscal-buffers-for-natural-disasters-in-pacific-island-countries-47011)

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## Bibliographic details
- Authors: Hidetaka Nishizawa, Scott Roger, Huan Zhang
- Published: July 12, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498320801.001

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### Purpose and scope
- Examines vulnerability of Pacific island countries (PICs) to severe natural disasters, especially cyclones.
- Estimates effects of severe natural disasters on fiscal revenues and expenditure in PICs.
- Combines fiscal impact estimates with information on the frequency of large disasters to calculate the rate of budgetary savings needed to build appropriate fiscal buffers.
- Emphasizes that estimates serve as a benchmark and should be adjusted for other financing sources and for budget risks from less severe or more frequent disasters.

### Key findings and implications
- Severe natural disasters in PICs inflict 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.
- Fiscal buffers provide:
  - self-insurance against natural disaster shocks,
  - facilitation of quick disbursement for recovery and relief efforts, and
  - protection of spending on essential services and infrastructure.
- The paper’s estimates can guide policymakers on the rate of budgetary savings required to build appropriate fiscal buffers.

### Methodology (as described)
- Estimates effects on fiscal revenues and expenditure from severe natural disasters.
- Combines these fiscal effect estimates with information on the frequency of large disasters to derive required budgetary savings rates for buffers.

### Policy recommendations and cautions
- Use estimated buffer benchmarks to inform budgetary saving rates for disaster self-insurance.
- Adjust benchmark estimates to account for:
  - other sources of financing, and
  - budget risks from less severe as well as more frequent disasters.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/07/12/fiscal-buffers-for-natural-disasters-in-pacific-island-countries-47011_