Indonesia's Finance Minister Sri Mulyani Indrawati give an explanation on IMF-World Bank Annual Meeting at the President Office on Tuesday (02/10) - Photo by TheinsiderStories

JAKARTA (TheInsiderStories) – Indonesian government will set up pooling funds for disaster around the archipelago, said senior government official. The special funds will be prepared to supplement the emergency reserve funds that are already in the Ministry of Finance at this time.

“We think of a pulling fund, in addition to the emergency reserve fund, for 2019 a pooling fund where the local government has a budget from the central government. Money is collected where the management of money is related to disaster,” said Finance Minister Sri Mulyani Indrawati after the limited meeting at the president office, Jakarta on Tuesday (02/10)

The initiative will starting to introduce in 2019 State Budget as becomes the forerunner of what is called catastrophic funds that can be accessed by local governments. “We replicate the mechanisms of Mexico and the Caribbean,” she added.

Sri explained that if a region is affected by a scale with a number of victims and a certain level it will get an additional budget. According to him, the government is still finalizing the planned pooling fund in 2019.

“This will be a forerunner for us to do what is called a katasropik fund that can be accessed by the local government,” Sri said.

Sri said the creation of this scheme mimics the experience of Mexico and Caribbean countries that are often affected by natural disasters such as high winds or tsunamis. Sri said the government would learn how to design the funding problem.

According to her, the government will not form a new institution to manage this pooling fund. Sri said that the regions did not distribute contributions to the pooling fund but the central government allocated its budget. The fund, according to him, is separate from the regional transfer fund.

The government also consider to insured the government buildings to eliminate the losses of disaster damage. Currently, Indrawati said, finance ministry has talk with the domestic and global insurance industry on the plan.