The Philippines is seeking a fresh $500-million loan from the World Bank to sustain its ongoing initiatives aimed at making the country more resilient and immediately respond to natural disasters.
World Bank documents showed that the proposed Third Disaster Risk Management (DRM) Development Policy Loan (DPL) with a Catastrophe Deferred-Drawdown Option (CAT-DDO) is being considered for approval of the Washington-based multilateral lender’s board in March next year.
The new development policy financing to be implemented by the Department of Finance will “strengthen the policy and institutional capacity of the government of the Philippines to reduce disaster risk, respond to and recover from natural disasters,” the World Bank said.
“This will be achieved by supporting policy actions aimed at further strengthening the policy, regulations and institutional framework for disaster risk reduction, and further enhancing the capacity to respond and recover from disasters,” it added.
The Philippines earlier secured $500 million each in credit lines for CAT-DDOs 1 and 2 in 2011 and 2015, respectively.
The 2011 CAT-DDO was the first-of-its-kind liquidity facility in the Asia-Pacific region.
According to the World Bank, the Philippine government requested for a third DRM DPL with CAT-DDO to “not only access immediate liquidity in the aftermath of severe disasters but more importantly access to technical support from the World Bank in strengthening their overall DRM policy reforms and developing institutional capacity to implement the reforms at the national and local levels.”
“This operation also builds on the previous two DRM DPLs with CAT-DDOs,” the lender added.
The World Bank noted that the Philippines remained highly vulnerable to adverse natural events, which creates risk to achievements in poverty reduction and long-term growth.
“Seventy-four percent of the population is vulnerable to natural disasters and 60 percent of total land area is exposed to multiple hazards. The most frequent and widespread of natural hazard events from 2005 to 2015 were climate-related. Around 90 percent of damage in recent years was from typhoons, and Supertyphoon ‘Yolanda’ alone killed 6,300 and caused $12.87 billion in damage in 2013, hampering economic growth by about 0.9 percent,” the bank noted.
As a result of the disaster, it said an additional 2.3 million people were estimated to have fallen below the poverty line. The frequency and severity of typhoons and flooding are expected to increase with climate change and will be most felt in coastal and urban areas.
“In addition to this, a projected magnitude 7.2 earthquake on the West Valley Fault [in Metro Manila] could cause 48,000 fatalities, $48 billion in economic losses, and catastrophic impact on government and business continuity,” according to the World Bank.