IDB launches $600 million credit facility for natural disaster emergencies

A new Inter-American Development Bank $600 million contingent credit facility will be available to help countries in Latin America and the Caribbean better cope with natural disasters. The facility loans will provide member countries with liquid resources to cover urgent financing needs after a natural disaster of unusual proportions, until other sources of funding can be accessed.

Drawdown of funds would be contingent upon the occurrence of a natural disaster of a type and intensity determined by the facility guidelines. Financial terms will be those regularly applied to IDB operations.

All member countries will be eligible to receive facility loans of up to $100 million or 1% of their gross domestic product, whichever is less. Countries are required to have an adequate integrated disaster risk management program.

The integrated disaster risk management program should include measures on risk analysis, prevention, mitigation, emergency preparedness and disaster response, as well as provisions for adequate and sustainable financing of the remaining risks, and should be executable in a period of no more than five years.

This facility is one of the instruments that the IDB has been designing to implement its integrated disaster risk management and finance approach. The approach includes a menu of financial options to cover different levels of risks arising from unexpected natural disaster emergencies.