WB OKs $500-M quick-disbursing credit line for PH | Inquirer Business

WB OKs $500-M quick-disbursing credit line for PH

By: - Reporter / @bendeveraINQ
/ 04:59 PM November 18, 2021

MANILA, Philippines—The Philippines can immediately release funds to mobilize response to natural disaster or a disease outbreak through a new $500-million loan extended by the World Bank.

The multilateral lender’s Washington-based board on Nov. 17 approved the Philippines’ fourth disaster risk management development policy loan with a catastrophe-deferred drawdown option (CAT-DDO 4), a fast-disbursing credit line.


With CAT-DDO, “the country can access funds upon the declaration of a state of calamity by the Republic of the Philippines due to an imminent or occurring natural catastrophe or a declaration of a state of public health emergency,” the World Bank said in a statement on Thursday (Nov. 18).

Due to the COVID-19 pandemic, the Philippines is currently in a state of calamity, which President Rodrigo Duterte had extended until September 2022.


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

The Philippines already benefited from World Bank loans with CAT-DDOs in 2011 and 2015, both amounting to $500 million.

The first CAT-DDO approved by World Bank a decade ago was the first-of-its-kind liquidity facility in Asia-Pacific.

Last year, another $500-million third disaster risk management development policy loan approved by the World Bank did not have a CAT-DDO because the financing was to be spent on COVID-19 response.

For CAT DDO 4, the World Bank said the loan’s full amount will be available three years after it takes effect, or upon signing of the loan agreement with the Philippines.

“This gives the government access to immediate liquidity to better manage the cost of shocks and protect the Filipino population. The government can renew this line of protection with the World Bank for up to a total period of 15 years,” it said.

The Department of Finance (DOF) borrowed CAT-DDO 4 on behalf of the Philippine government.


CAT-DDO 4 “supports ongoing government efforts to strengthen disaster response and recovery policies and planning” such as mainstream use of pre-approved disaster rehabilitation and recovery plans which the World Bank said could “speed-up access to funding from the national government for post-disaster recovery.”

“In the aftermath of disasters, skilled workers in areas like construction, welding, electrical installation and maintenance, pipe-laying, heavy equipment operation, and food production are crucial for reconstruction and rebuilding,” WB said.

“Part of the program will support strengthening delivery of community-based technical and vocational training,” it added.

“This CAT-DDO4 also supports government efforts to integrate climate risk management in the preparation of provincial commodity investment plans among local government units (LGUs), which can lessen the extent of agricultural and fisheries damage resulting from natural hazards and extreme weather events,” it added.

World Bank senior disaster risk management specialist Lesley Jeanne Cordero said the CAT-DDO 4 financing will “enable local governments to take stock of climate actions, track and report climate change expenditures to inform investment planning and programming for risk resiliency,” especially next year when LGUs assume bigger responsibilities alongside their larger budgets with the implementation of the Supreme Court’s Mandanas-Garcia ruling in full swing.

World Bank country director for Brunei, Malaysia, the Philippines and Thailand Ndiamé Diop said “this contingent funding mechanism protects the Philippines’ fiscal health following natural disasters and disease outbreaks, helps develop sustainable risk financing mechanisms for local government units, and cushions poor and vulnerable households from the impact of disasters.”

“If not managed well, these shocks can exacerbate poverty through the loss of lives, destruction of assets, disruption of economic activities and trade, and indirect impacts on health, mobility, and access to education,” Diop said.

World Bank noted that the Philippines’ unique geography — an archipelago in the so-called Pacific Ring of Fire — exposes the country to a wide array of natural calamities like earthquakes and volcanic eruptions.

The Philippines is also located in a typhoon belt which makes millions of Filipinos vulnerable to flooding, landslides, storm surges as well as tsunamis.

With the approval of CAT-DDO 4, there remained 12 forthcoming loans worth a total of $2.45 billion in the World Bank’s near-term pipeline for the Philippines.

Also scheduled for approval by World Bank this month was the $200-million multi-sectoral nutrition project. In December, the lender’s board was expected to approve the $300-million financing to buy booster shots and jabs for children under the expanded mass vaccination program.

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TAGS: Business, credit line, disaster response, economy, Loans, pandemic, World Bank
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