World Bank extends $500-M credit line to Philippines for disaster risk program

MANILA, Philippines - The World Bank is extending a $500-million credit line to help the Philippines prepare for further damage caused by natural disasters.

The credit line will come from the Second Disaster Risk Management Development Policy Loan with a catastrophe-deferred drawdown option (CAT-DDO 2), which provides a $500-million package to strengthen investment planning and regulations to reduce disaster risks and help manage the financial impacts when disasters strike.

CAT-DDO 2 gives the Philippines flexibility to use the funds as needed.

The World Bank said the drawdown period is three years and renewable up to four times for a total of 15 years. Amounts repaid during the drawdown period are available for subsequent withdrawal.

World Bank country director Motoo Konishi said this new operation signifies the World Bank’s recognition of the Philippines’ comprehensive efforts to strengthen the country’s capacity for managing disaster risks.

The World Bank official said if not managed well, disasters can roll back years of development gains and plunge millions of people into poverty.

 “Disasters can induce and exacerbate poverty through the loss of lives, destruction of assets, disruption of economic activities and trade, and indirect impacts on health, mobility, gender equality, and access to education,” Konishi added.

The Philippines was the first country in the Asia and Pacific region to use this type of financing option with the CAT-DDO in 2011.

 “This second CAT-DDO will provide the government with a platform for sustaining reforms and effectively implementing the country’s disaster risk reduction and management program,” the World Bank said yesterday in a statement.

Finance Secretary Cesar V. Purisima said the Philippines could access the credit line following “a state of calamity” declared by the President.

“The Philippines is among the most vulnerable countries in the world. Together, the 20 most vulnerable countries face escalating losses of $44.9 billion due to climate-related natural disasters alone. Inaction is set to cost us even more. With the number set to multiply almost 10-fold by 2030, amounting to $418 billion, we turn to innovative financing mechanisms to boost our resilience,” Purisima said.