World Bank to OK $500-M immediate liquidity to disaster-hit LGUs | Inquirer Business

World Bank to OK $500-M immediate liquidity to disaster-hit LGUs

By: - Reporter / @bendeveraINQ
/ 05:22 AM August 20, 2021

The World Bank is expected to greenlight in October a $500-million loan that could be expeditiously disbursed to local governments in need of funds especially in the aftermath of natural disasters and disease outbreaks.

The proposed fourth disaster risk management development policy loan, which would be up for approval by the World Bank board on Oct. 28, has a catastrophe-deferred drawdown option (CAT-DDO).


Regular loans are usually disbursed on a multiyear, predetermined implementation schedule. CAT-DDO funds, meanwhile, are released as soon as the government declares a state of calamity or public health emergency.

The World Bank defined CAT-DDO as a “contingent financing line that provides immediate liquidity to countries to address shocks related to natural disasters and/or health-related events.”


Loans with CAT-DDO “serve as early financing while funds from other sources such as bilateral aid or reconstruction loans are being mobilized,” the World Bank added.

The Philippines secured CAT-DDOs worth $500 million each in 2011 and 2015.

The country also tapped from the World Bank last year a $500-million disaster risk management development policy loan. This did not have a CAT-DDO attached to it since it was to be spent on COVID-19 response.

Addressing key gaps

The forthcoming loan, to be implemented by the Department of Finance, specifically “will focus on addressing the key gaps in the management of risks associated with natural disasters and support actions geared toward institutionalizing the use of disaster recovery plans for vulnerable LGUs (local government units) in requesting access for funding from the National Disaster Risk Reduction and Management Fund to expedite the rehabilitation and reconstruction process; integrating climate and disaster risk information of LGUs within the national government’s geospatial information management and analysis project for hazards and risk assessment in the Philippines (GeoRiskPH) platform; and expanding the government’s existing skills development program to vulnerable workers affected by the COVID-19 pandemic and future health emergencies and disasters,” the World Bank said, referring to the annual calamity fund in the national budget.

The World Bank noted natural disasters, made more difficult by climate change and pandemics, aggravate economies and “keep or move people back into poverty.”

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TAGS: $500-million loan, World Bank
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