World Bank approves Philippines cat credit line
The World Bank has approved a $500 million catastrophe contingent line of credit to support the Philippines’ effort to manage natural disaster risk.
The second disaster risk management development policy loan with a catastrophe-deferred drawdown option (CAT-DDO 2) provides the capital to strengthen investment planning and regulations to reduce disaster risks and help manage the financial impacts when disasters strike.
The Philippines can access the new credit line following ‘a state of calamity’ declared by the president, with a drawdown period is three years and renewable up to four times for a total of 15 years.
Cesar Purisima, finance secretary of the Philippines, said: "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 ten-fold by 2030, amounting to $418 billion, we turn to innovative financing mechanisms to boost our resilience.”
This is the second such loan that the World Bank has arranged for the country. In 2011, the Philippines was the first country in the Asia-Pacific region to use this type of financing option with the CAT-DDO in 2011.
