Disasters resulting from natural hazardsrepresent an important challenge for Colombia’s fiscalsustainability and stability. Colombia is one of thecountries with the highest recurrence rate of disasterscaused by natural hazards in Latin America (see the Annex)1.As the country’s population and economy continue to grow, sowill the economic losses resulting from such events, anaverage of 600 disaster events of which is reported peryear2. Colombia’s rate of economic growth is increasing thebase of assets exposed to disaster risks, which may lead tosignificant increases in losses, particularly if investmentsin new assets are not accompanied by plans for mitigatingdisaster risk. The Government of Colombia (GoC) recognizesthe importance of mitigating these events and has takenseveral steps to mainstream disaster risk management intoits policy and programs, as evinced by the NationalDevelopment Plan ‘2014-2018’, ‘all for a New Country’. TheMHCP is committed to developing strategies for reducing itscontingent liabilities in relation to disasters and tomanaging the fiscal risk resulting from these events. Thisdocument presents the priority policy objectives that havebeen established to assess, reduce, and manage fiscal riskdue to natural disasters. It also describes the MHCP’sefforts to progress its policy objectives in the long term.These policy objectives represent the MHCP’s ex ante policyframework regarding management of financial and fiscaldisaster risk. The MHCP identifies three priority policyobjectives in order to strengthen management of theGovernment’s contingent liabilities and thus support thegoal of achieving macroeconomic stability and fiscalbalance. The policy objectives are: (i) identification andunderstanding of fiscal risk due to disasters; (ii)financial management of natural disaster risk, including theimplementation of innovative financial instruments; and(iii) catastrophe risk insurance for public assets.
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