Philippines typhoon rebuilding may cost 50 percent more this year than estimated

[January 09, 2014]  By Rosemarie Francisco and Karen Lema

MANILA (Reuters) — The cost of typhoon reconstruction this year could reach 138 billion pesos ($3.1 billion), more than 50 percent higher than initially estimated, as the Philippines seeks to build back better and put in safeguards for future disasters, the budget secretary said on Thursday.

The total cost of a four-year reconstruction effort may also end up steeper than the current estimate of 361 billion pesos, Florencio Abad said.

Typhoon Haiyan, one of the strongest storms to make landfall anywhere, reduced almost everything in its path to rubble when it swept ashore in the central Philippines on November 8, killing at least 6,190 people, leaving 1,785 missing and 4 million either homeless or with damaged homes.

"The plan was 90 billion (pesos) for the year, but I think it will be more," Abad told Reuters in his Manila office, adding typhoon-related spending would reach 138 billion pesos.

"I don't think they (reconstruction planners) have factored in the need to introduce resiliency. So that will be 10-30 percent more."

Apart from the immediate need for temporary shelter, providing jobs and restoring water, health and sanitation services, the government underestimated other costs, including that of identifying and documenting the dead before they are buried.

"There is an international standard for doing it, before you bury them, that wasn't factored in. That's a lot of money already," Abad said, adding the government could adequately finance a higher post-typhoon spending bill this year.

Manila has set aside funding of 54 billion pesos for the rebuilding effort from a supplemental budget passed late last year, this year's national budget, savings, calamity and other funds. At least 80 billion pesos more would come from concessional loans offered by the World Bank, Asian Development Bank and the Japan International Cooperation Agency.

"We can fund it. The question is can we absorb it? That is why we have to start early," Abad said.

Going forward, the Philippines, which is hit by an average 20 typhoons a year, is considering not only building typhoon-resilient structures but also permanent evacuation centers equipped with generators and supplies — an initiative that wasn't part of initial plans.

The government is also considering major infrastructure projects in the central Philippines, such as relocating the coastal airport in Tacloban, the city that bore the brunt of the storm.

The reconstruction effort will ensure the country hits the midpoint to higher end of its 6.5 to 7.5 percent growth target this year, Abad said, adding growth in 2013 was likely to be near the top end of the government's 6-7 percent goal.

That view is shared by economists, with Citibank forecasting growth of 7.3 percent this year. Local investment bank First Metro Investment Corp has said it projects growth 2014 at 7-7.5 percent, buoyed by strong domestic demand and rehabilitation in disaster-hit areas.

($1 = 45 pesos)

(Editing by Nick Macfie)

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