PHL opens $500M disaster response credit line with World Bank

The Philippines has opened a $500 million line of credit with the World Bank that can be “immediately tapped for emergency relief, recovery and reconstruction following a major natural disaster." Finance Secretary Cesar Purisima and World Bank Country Director for the Philippines Bert Hofman signed the financing agreement on September 23 at the sidelines of the Annual Meetings of the World Bank and International Monetary Fund (IMF) in Washington D.C. According to the World Bank, drawdown from the CAT-DDO will be triggered by a presidential declaration of a “state of calamity." The drawdown period is three years and renewable up to four times for a total of 15 years. Details of the new financing were disclosed September 28. Calamity credit The line of credit is a facility called Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option (CAT-DDO). “CAT-DDO provides us with resources to finance immediate relief, recovery and reconstruction, thus lessening social and economic dislocation in affected communities, especially on the poor who are the most vulnerable," Purisima said. “It will also help reduce the country’s fiscal vulnerability in the event of a catastrophic adverse natural event," according to Purisima, who also stressed that the new financing option gives the country flexibility to use the funds only if needed. The World Bank said in a statement that its Board of Executive Directors discussed and approved the CAT-DDO on September 13, 2011. “The Philippines has taken a proactive approach to deal with natural disasters by mainstreaming risk reduction into development planning, enhancing the government’s institutional capacity and reducing its fiscal exposures to natural calamities," Hofman noted. “CAT-DDO is the first financing for the Philippines signed for Fiscal Year 2012, and reaffirms the Bank's continued support to the country as discussed during meetings of Bank officials with the Philippines delegation at the Annual Meetings," the World Bank said. The global aid agency added that other sectors “lined up for Bank support in Fiscal Year 2012 include health, education, and waste water management, and a possible Second Development Policy Loan." — ELR, GMA News