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Monday, October 14, 2019

Ministro de Hacienda expone en seminario “Manejo Financiero de Desastres Naturales" en marco de APEC Chile 2019

Santiago, October 14, 2019. Treasury Minister Felipe Larraín presented today at the seminar "Enhancing Financial Risk Management Against Disasters" organized by the Treasury Ministry with the support of the World Bank in the context of APEC Chile 2019.

During his presentation, the official noted that even though the Asia-Pacific region has experienced impressive economic growth over recent decades, it is exposed to a wide range of natural hazards and ecological imbalances in addition to growing climate volatility.

“These risks are expected to continue to cause widespread social and economic damage. Chile is no stranger to the impacts of natural disasters,” he noted.

The Minister also added that such events generate a significant fiscal risk and create enormous volatility in countries’ public budgets. "Even economies with robust programs for managing the risks of natural disasters can face significant exposure to the economic and fiscal shocks caused by them," he warned.

Given this context, he stressed that effective financial management to address the risks of natural disasters through comprehensive protection strategies is a key challenge in the design of public policies for governments the world over.

The Treasury Minister referred to the financial management of natural disasters and the sense of urgency with which Chile has addressed this issue with initiatives such as the issuing of a catastrophe bond for close to US$1.4 billion in the context of the Pacific Alliance. “This bond is to counter catastrophes and in addition to obtaining very favorable conditions, it has received several international awards because we combined the risks of four economies. By doing this, we managed to diversify the risk from the point of view of bond investors, and that lowered the rates to be paid,” he said.

On the importance of the financial track of the APEC 2019 Agenda, the Treasury Minister reiterated that this is a very important milestone and an excellent opportunity to show our commitment to multilateralism and international integration, even more so considering the pillars that Chile is promoting in APEC in the area of finance, which are as follows:

  • Boosting integration in financial markets through the digital economy
  • Promoting financial inclusion in the digital age
  • Strengthening financial management of risks posed by natural disasters

Regarding the rapprochement between the United States and China, the Treasury Minister noted that, “This progress is very important and today we are hearing that an agreement could be signed within the context of APEC. This would be the most important news to date in terms of the international economy (...) The fact that we may find a solution to the conflict is something very positive at the global level and in particular for an economy as globalized as that of Chile. This news is very important and we hope it leads to a positive outcome.”