World Bank Announces $1bn Assistance for Indonesia Natural Disaster Recovery and Preparedness

NUSA DUA, Bali, Indonesia, October 14, 2018—The World Bank has announced imagesfunding of up to $1 billion for the Government of Indonesia to supplement relief and reconstruction efforts in the disaster-affected areas of Lombok and Sulawesi, and to bolster long-term resilience.

The funding will be available on request by the Government. It would be guided by a US$5 million grant for technical assistance for detailed planning to ensure reconstruction is resilient and community-led.

On Friday I visited the city of Palu in Sulawesi with His Excellency Vice President Kalla. It is humbling to see the devastation and hear the stories of those who have been affected”, said World Bank Chief Executive Officer, Kristalina Georgieva. “The Government’s immediate relief efforts are robust and impressive. As we enter the reconstruction phase we are making up to $1 billion of comprehensive support available for Indonesia. The best memorial to those who lost their lives is build back better.”

The World Bank package could include cash transfers to the poorest 150,000 affected families for a period between 6 months to one year. This augmentation of existing social protection systems is designed to support the local economy and employment during the recovery phase and to avoid long-term damage to human capital.

The proposed $1 billion package could also include a new standalone emergency recovery program to finance rebuilding of critical public facilities and infrastructure assets: hospitals, schools, bridges, roads, highways, water supply infrastructure. It would also strengthen monitoring and early warning systems, and help to finance the reconstruction of housing settlements and neighborhood level infrastructure and services.

“The government appreciates the attention and support of the international community in our time of need, including from the World Bank Group. Restoring lives and livelihoods of the people affected by natural disasters is the government’s utmost priority,” said Sri Mulyani Indrawati, Finance Minister of Indonesia. “The World Bank Group has deep and specialist expertise in the area of developing sophisticated financial instruments that can manage risk, and fiscal buffers to prepare for shocks. Indonesia aims to strengthen our resilience towards natural disasters and we look forward to our continued partnership.

The World Bank has recently concluded a preliminary damage needs report that assesses the geospatial distribution of the damage, and the estimated cost of the infrastructure, residential and non-residential property that was affected by the Tsunami in Sulawesi. The estimated physical loss is around $531 million (IDR 8.07 trillion), as follows:

  • Residential housing – approximately US$181 million (IDR 2.75 trillion)
  • Non-residential sector – approximately US$185 million (IDR 2.82 trillion)
  • Infrastructure – approximately US$165M (IDR 2.5 trillion).

The preliminary report is the first economic loss estimate based on scientific, economic and engineering analysis. It does not account for loss of life, lost land or the disruption to the economy through lost jobs, livelihoods and business, and is the first input towards supporting the Government of Indonesia’s recovery and reconstruction planning.

“Today, as the fourth most populous country in the world – and now a middle-income country – Indonesia has enjoyed strong economic growth and is making significant advancements with poverty eradication efforts”, said World Bank Country Director for Indonesia, Rodrigo A. Chaves. “By working with the government on resilience, disaster recovery and preparedness we aim to help ensure that Indonesia continues its upward economic path.”

About the World Bank’s partnership with Indonesia

The World Bank’s deep and productive partnership with Indonesia dates back to 1954. Over the past three years, we have committed to 18 projects to covering social assistance, primary health care and nutrition and early childhood development. Our partnership is particularly focused on supporting the development of Indonesia’s human capital and in the implementation of the government’s ambitious National Strategy for Stunting Prevention.

Following the 2004 Tsunami, the World Bank, along with several global partners, contributed to the recovery and reconstruction efforts in Indonesia by establishing the Multi Donor Fund for Aceh and Nias. This managed around $655 million to rebuild 20,000 earthquake-resistant homes, 3,850 km of roads, 1,600 km of irrigation canals, 677 schools, 500 town halls, 72 clinics, 8,000 wells and clean water sources, as well as more than 1200 sanitation units, among others.

About the World Bank and Disaster Risk Recovery and Preparedness

Disasters hurt the poor and vulnerable the most. Over the past decade, the World Bank has emerged as the global leader in disaster risk management, supporting client countries to assess exposure to hazards and address disaster risks.

Mainstreaming disaster risk management into development planning can reverse the current trend of rising disaster impact. Furthermore, when countries rebuild stronger, faster and more inclusively after disasters, they can reduce the impact on people’s livelihoods and well-being by as much as 31%, potentially cutting global average losses.

If countries act decisively, they can save lives and assets. However, many developing countries lack the tools, expertise, and instruments to factor the potential impacts of disasters into their investment decisions.

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