ADB Approves $56.4M Program to Boost Disaster Finance in Kyrgyz Republic, Tajikistan

The aim is to establish a long-term, sustainable disaster risk management (DRM) architecture that can absorb shocks and recover faster, minimizing the human and economic toll of disasters.

The Asian Development Bank (ADB) has approved a $56.4 million disaster relief finance program designed to strengthen the fiscal and institutional capacity of the Kyrgyz Republic and Tajikistan to respond swiftly and effectively to natural disasters and emergencies. The initiative, known as the Risk-Layered Disaster Relief Finance Program, introduces an innovative combination of pre-arranged financial instruments to support the countries’ resilience against high-impact events such as earthquakes, floods, and health emergencies.

Both countries lie in a region that is highly prone to geophysical and climatic hazards, and yet face significant limitations in their ability to absorb and respond to economic shocks triggered by such events. The new ADB-supported initiative represents a major shift from reactive post-disaster aid to a proactive, structured approach to risk financing and disaster preparedness.

“The program will help reduce fiscal strain for both countries in the aftermath of disasters, which include geophysical hazards, extreme weather events, and health emergencies,” said Leah Gutierrez, ADB Director General for Central and West Asia.

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Two-Tiered Financing Mechanism: A Model for Climate Resilience

At the heart of the program is a risk-layered financing strategy, integrating two complementary instruments tailored to address different levels of disaster severity:

1. Contingent Disaster Financing (CDF)

   • Provides budgetary support for medium-severity disasters and health emergencies

   • Ensures rapid access to liquidity for early response and recovery

   • Helps stabilize public finances and maintain essential services during crises

2. Disaster Relief Bond (DRB)

   • A catastrophe bond issued in international capital markets

   • Offers immediate funding for high-severity events through capital market payouts

   • Functions as a risk transfer mechanism, shifting the financial burden from governments to investors

This combination of budgetary and market-based tools allows the Kyrgyz Republic and Tajikistan to layer their disaster response capacity, ensuring coverage across the spectrum of low-, medium-, and high-impact events.

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Focus on Institutional Reform and Capacity Building

Beyond financing, the program is designed to embed resilience into governance and institutions. Key focus areas include:

• Policy reforms to improve national disaster risk financing strategies

• Strengthening of government institutions responsible for disaster preparedness and response

• Enhanced coordination mechanisms between agencies to enable faster and more efficient responses

• Transparency and accountability frameworks to ensure funds are used effectively and reach affected populations

The aim is to establish a long-term, sustainable disaster risk management (DRM) architecture that can absorb shocks and recover faster, minimizing the human and economic toll of disasters.

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Embedded in the CAREC Regional Framework

The program was developed under the framework of the Central Asia Regional Economic Cooperation (CAREC) Program, a multilateral partnership supported by ADB. CAREC brings together 11 countries and multiple development partners to promote economic growth, infrastructure investment, and climate resilience across Central Asia.

ADB’s Technical Assistance for Developing a Disaster Risk Transfer Facility was instrumental in preparing the program, offering analytical support and policy advice to ensure that disaster risk financing solutions align with regional priorities and international best practices.

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Funding Sources and Social Impact

The $56.4 million total financing package comprises:

• $53.1 million in grant funding from the Asian Development Fund (ADF)

• $3.3 million in cofinancing from the Asia-Pacific Climate Finance Fund

The ADF, ADB’s concessional window for its poorest and most vulnerable member countries, has played a vital role in building resilience in the region. Between 2021 and 2024, the ADF supported programs that helped over 384,000 people rise out of poverty and generated approximately 500,000 jobs.

This new program extends the Fund’s impact by helping governments prepare financially for the inevitable consequences of climate change and natural hazards — rather than scrambling to respond after disasters strike.

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A Step Toward Financial Resilience and Regional Stability

The Risk-Layered Disaster Relief Finance Program is a flagship initiative for the region, offering a model that other disaster-prone developing countries can adapt. By combining financing, policy reform, and institutional capacity, the program sets a precedent for integrated disaster risk management tailored to small economies with high exposure and limited fiscal space.

It not only builds financial buffers for crises but also fosters a culture of proactive risk management, critical for achieving sustainable development in the face of increasing climate variability and seismic threats.