World Bank OKs $500M emergency fund for Philippines

The World Bank has opened a $500-million emergency credit facility that the Philippines can tap in times of disaster.

Representatives of the World Bank and the Philippine government signed recently in Washington the agreement on the credit facility as both parties believed in the need to improve the country’s preparedness in times of crisis, the World Bank said in a statement issued Wednesday.

The credit line, called the Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option (CAT-DDO), will support the Philippine government’s program on disaster-preparedness enhancement, the multilateral agency said.

Finance Secretary Cesar Purisima said in the same statement that the credit line would be useful given that the money could be immediately drawn from it when a disaster should hit the country.

Purisima said this would allow the country to immediately respond to needs for recovery, relief and reconstruction while other usual sources of funds were being sought.

“When disaster strikes, we are often confronted with the urgent need to provide emergency assistance to victims and to rebuild roads, hospitals, schools, irrigation systems, electric power and water supply and other important infrastructure,” Purisima said.

The finance chief added that the opening of the emergency credit facility would prevent the country from taking funds away from other vital public expenditures in times when it needed to spend on relief, recovery and reconstruction following disasters.

“It will also help reduce the country’s fiscal vulnerability in the event of a catastrophic adverse natural event,” Purisima said.

He said the facility could be tapped only in times of disasters and could not be used for other purposes. The World Bank will only disburse funds from the credit facility following a declaration of a state of calamity by the President.

Meantime, World Bank country director Bert Hofman said the credit facility indicated the foreign lender’s support for vital projects and programs of the Philippine government.

The World Bank said the credit facility was important given that the Philippines was one of the most vulnerable countries to calamities given its location.