Peru strengthens disaster risk management with IDB support

New loan for $25 million will help support implementation of reforms

The Inter-American Development Bank approved a $25 million loan to support Peru's efforts to reduce its vulnerability to natural disasters and enhance its ability to respond to emergencies.

Peru is one of the Latin American countries most exposed to natural disasters risks. According to a recent assessment carried out by the IDB, an earthquake similar to those that occurred recently in Haiti or Chile could cause losses of up to $43 billion in Peru.

This is the second in a series of programmatic policy-based operations for Peru. The first, for $25 million, was approved in 2010. The third, for $20 million, is scheduled for 2012. These flexible loans provide governments fast-disbursing resources to finance priority programs. Disbursements take place once agreed targets are achieved.

Under the first operation, the IDB supported the Peruvian government’s process of regulatory, institutional, and public policy reform in the areas of risk identification, vulnerability reduction, disaster management and financial management of natural disaster risk.

The second operation will support the Peruvian government’s to draft and approve regulations within the legal framework of its National Disaster Risk Management System. The regulations resulting from the new law will place Peru at the region’s forefront in terms of disaster risk management.

The new loan is for 20 years, with a 5-year grace period and a variable interest rate based on LIBOR. The executing agency is the Ministry of Economy and Finance of Peru, acting through the National Office of Public Sector Borrowing and the Sector Loan Coordination Unit.