Financial protection of the state against natural disasters: a primer

This paper presents a simple framework to help policy makers devise financial protection strategies against 'natural' disasters. It starts with a short analysis of the impact of disasters on government budgets and fiscal balances. It presents various instruments available to governments interested in improving their response capacity in the aftermath of a disaster while protecting their long-term fiscal balance. It then provides a brief analysis of various dimensions to be considered in the establishment of a cost-effective financial protection strategy and provides a general framework to guide the establishment of such a strategy.