Support for small states in the event of a disaster: The World Bank broadens the modalities – Lequotidien

The World Bank Group has expanded “the terms of its support to disaster-stricken countries, allowing small, vulnerable states to defer loan and interest repayments following a catastrophic event, so that public authorities can focus on recovery efforts.By Dialigué FAYE –

In response to country feedback, the World Bank’s Temporary Debt Suspension Clause (Dcr) now covers all natural disasters, including droughts, floods and health emergencies such as pandemics. Previously, recalls the Bretton Woods institution, “only tropical cyclones and earthquakes could fall under this clause which allows those eligible to defer, for a period of up to two years, the repayment of the principal and/or interest on loans taken out with Bird (International Bank for Reconstruction and Development: Editor’s note) and Ida (International Development Association: Editor’s note).”

“By significantly expanding the scope of this clause to cover all types of disasters, we are helping vulnerable countries access more aid more quickly. In times of crisis, leaders need a reliable partner who supports them. And the World Bank wants to take on this role,” World Bank Group President Ajay Banga said in a statement.

Of the 45 countries eligible for the CDRC, notes the document, “14 have included it in their loan agreements and, among them, Saint Vincent and the Grenadines has already used it after the passage of Hurricane Beryl . This clause does not entail any cost for borrowers, and all related costs are covered by concessional resources.

In addition to expanding the reach of the CDRC to better meet the needs of countries facing a multitude of natural hazards, the World Bank has also simplified the process of requesting a repayment deferral in the event of a disaster.

“The provision for temporary suspension of debt payments after a climate shock is part of a broader set of measures made available to countries to help them cope with the devastating effects of natural disasters. This suite of World Bank tools for crisis preparedness and response also includes measures aimed at reallocating funding for emergency interventions,” mention Mr. Banga’s colleagues.
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