The World Bank’s Board of Executive Directors has approved $150 million in contingent financing for the Government of Nepal to enhance its capacity to respond to natural or climate-induced hazards and health emergencies.
This initiative, known as the Nepal Disaster Resilience Development Policy Credit with Catastrophe Deferred Drawdown Option (Cat DDO), aims to support crucial policy reforms that bolster disaster resilience and improve institutional mechanisms for effective disaster response. It will also enhance early warning systems and establish necessary regulatory frameworks for risk reduction and informed investment in critical infrastructure.
The Cat DDO provides immediate liquidity following a disaster, allowing the government to efficiently manage recovery efforts without reallocating resources from ongoing development programs. This financing is essential for Nepal, particularly in light of recent flooding and the ongoing challenges posed by various natural and health crises.
David Sislen, World Bank Regional Country Director, emphasized the urgency of strengthening Nepal’s disaster response capabilities, highlighting the country’s vulnerability to escalating risks. The Cat DDO complements existing government mechanisms, including the National Disaster Management Fund and the Prime Minister’s Disaster Relief Fund.
This operation is supported by technical assistance and funding from the Global Facility for Disaster Risk Reduction and Recovery (GFDRR) and various international partners.