WASHINGTON: The World Bank’s Board of Executive Directors today approved $150 million in contingent financing for the Government of Nepal to use in the event of a natural or climate-induced hazard or health emergency in Nepal.
The Nepal Disaster Resilience Development Policy Credit with Catastrophe Deferred Drawdown Option (Cat DDO) operation supports policy and regulatory reforms to increase disaster resilience and strengthens institutional mechanisms for effective disaster response. It also supports the government in improving early warning systems and building the policies, institutions, and regulatory frameworks needed for risk reduction and risk informed investment in critical infrastructure as well as increasing preparedness for public health emergencies.
Contingent financing through the Cat DDO, which provides access to immediate liquidity in the aftermath of a disaster provides the government one more instrument in its approach for disaster response and recovery. In the case of Nepal, post-disaster resources are critical to disaster response and recovery across the three levels of Nepal’s federal system.
“As the flooding of recent weeks has shown, Nepal is facing a polycrisis of natural and climate-induced hazards and health emergencies, putting the country at ever increasing risk of serious financial shocks,” said David Sislen, World Bank Regional Country Director for Maldives, Nepal, and Sri Lanka. “This operation supports the government’s reforms to build resilience against these escalating risks and provides a line of credit that can be accessed immediately following a disaster or public health emergency to ensure a timely and effective response.”
The Cat DDO is an innovative disaster risk financing instrument that would help the government respond quickly to emergency needs without diverting resources from its ongoing development programs. It will complement the government’s existing response mechanisms such as the National Disaster Management Fund and the Prime Minister’s Disaster Relief Fund.
The Nepal Disaster Resilience Development Policy Credit with Cat DDO operation is supported by technical assistance and grant funding from the Global Facility for Disaster Risk Reduction and Recovery (GFDRR) and the Earthquake Housing Reconstruction Multi-Donor Trust Fund supported by the Canadian government, U.S. Agency for International Development (USAID), the Foreign, Commonwealth and Development Office (FCDO), and Swiss Agency for Development and Cooperation (SDC).