2018 FEMM: The Pacific Resilience Facility




25-27 April 2018

Koror, Palau


Summary of Issue
To present the proposal for a Pacific Resilience Facility (PRF) for the consideration of the Forum Economic Officials and Ministers. The PRF is designed on the principles of: Regional ownership; Affordable and contextualised financing; Additionality and complementarity; and investment in preparedness. The PRF seeks to serve four strategic objectives:
(i)                 Strengthen the collective financial resilience of Forum Island Countries (FICs);
(ii)               Provide cost-efficient and contextualised financing options for resilient development;
(iii)             Strengthen strategic partnerships with key development partners; and
(iv)             Encourages capacity development in national disaster risk budgeting and financing.
  1. Discussion

The process undertaken to develop this paper
The Paris Agreement (COP 21; Article 9) requires cooperative response to address the needs of developing countries (especially, the Small Developing Islands States (SIDS)) through continued mobilisation of finance from a wide variety of sources, instruments and channels, and through a variety of actions, including supporting country-driven strategies, taking into account the needs and priorities of developing countries. Furthermore, it emphasises the scale-up of finance mobilisation beyond existing efforts, especially for those developing countries that are particularly vulnerable to the adverse effects of climate change and have significant capacity constraints, such as SIDS.

  1. In alignment with this global agenda, the Pacific Leaders committed the regional action to integrate adaptation and risk reduction considerations in development initiatives, to enhance resilience to climate change and disasters through the Framework for Resilient Development (FRDP) in the Pacific in 2016. Further, through the FRDP, Leaders also recognised the importance of strengthening disaster preparedness, response and recovery in the FICs.


  1. At the 2017 Forum Economic Ministers Meeting, Ministers considered a policy paper on a Regional Financing Facility which proposed a variety of innovative policy options for financing and accelerating development initiatives in FICs. Ministers commended the paper and agreed that the proposal focus on targeted financing products and options especially for addressing critical regional challenges.


  1. Subsequent to this meeting, PIFS held discussions with the Troika of FEMM Chairs[1] to seek guidance on the way forward. In the margins of the 2017 Asian Development Bank (ADB) Annual Board meeting in Yokohama, the Troika suggested that PIFS refocus the proposal on high impact implementable policy options for the FICs.


  1. One of the first and key policy options that was mutually identified as high policy impact for the countries by the Troika was a Regional Facility to support preparedness to impacts of natural disasters and assist in climate change resilient development. In parallel, the Secretary General, Dame Meg Taylor sought the advice of international experts including Professor Lord Nicholas Stern (of the London School of Economics & Member of International Advisory Panel of the AIIB) at the Asia Infrastructure Investment Bank (AIIB) Annual meeting in Jeju, South Korea. It was agreed that focusing the regional fund on building resilience in the FICs would have higher impact and contribute to minimising economic and climatic shocks and stresses, especially on national infrastructure.


  1. At a special side-event during the Green Climate Fund (GCF) meeting in Tonga in July 2017, the FEMM Troika (Cook Islands & Samoa supported by Tonga) supported the concept note and asked for further clarification and expansion on the design of the proposed Pacific Resilience Facility (PRF). In addition, the FEMM Troika agreed and supported wider discussion with Forum Member countries on the revised concept note at the IMF-WBG Annual meetings in October 2017.


  1. Based on the discussions at the IMF-WBG Annual Meetings side-event, the Economic Ministers agreed to set-up a Technical Working Group (TWG) of the FEMM Troika supported by Fiji and New Zealand to guide further work on the proposed PRF led by PIFS. PIFS was also directed to carry-out country consultations on this proposed fund aligned to the Regional Finance Facility discussions at 2017 FEMM.


  1. In line with the agreed arrangements, PIFS carried-out extensive country consultations on the proposed PRF and convened two TWG meetings in January and March 2018 to seek further guidance on:
  2. the objectives of the proposed PRF and what gaps this Facility can address in the region and nationally;
  3. a fit-for-purpose and lean governance structure which can be supported by the FICTs and prospective donors based on successful regional experience;
  4. specific functions and associated financial products that can be mobilised to support FICTs;
  5. simulated financial scenarios based on some heuristic assumptions (aligned to FICTs’ experiences with MDBs/international financing arrangements) to provide some clarity on the sustainability of the PRF and sensitivity analyses of proposed financial products.


  1. The TWG provided valuable feedback and guidance in shaping and crystallising the issues to ensure that this proposed PRF provides unique opportunities for FICTs to build resilience, through upfront investment in preparedness to natural disasters and climate change adaptation to minimise future loss of lives, displacement of people and extensive economic losses.


  1. The full proposal is provided as Attachment 1 to this paper.

Pacific Islands Forum Secretariat, Suva
3 April 2018
[1] Cook Islands (Chair of last FEMM), Samoa (Current FEMM Chair), and Palau (Incoming FEMM Chair)

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