An effective disaster risk financing and insurance (DRFI) strategy can help increase the country’s fiscal resilience against natural disasters, as part of a broader disaster risk management agenda. Past experiences have shown that if adequate and timely funding arrangements are not in place, the adverse socioeconomic impact of a disaster can be exacerbated both at the macroeconomic and household levels. This study has shown that existing DRFI strategy continues to rely mainly on budget appropriations to finance recovery and reconstruction efforts. But the uncertainties of annual budget allocations can be disruptive as budgets for programmed social or economic expenditures are realign to meet short-term post-disaster reconstruction. As such, following the experience of Mexico in DRFI management, the study has suggested a natural disaster trust fund to secure advance financing of disaster costs, in particular reconstruction operations. If the financial management and governance procedures of these funds are not carefully designed, natural disaster funds can undermine fiscal discipline and transparency.