WASHINGTON, DC, USA: Following requests from several Latin American and Caribbean countries, the Inter-American Development Bank (IDB) has announced that it has developed a financial risk management approach for natural disasters, aimed at helping the countries to be better prepared to deal with emergencies caused by catastrophic natural events.
The IDB said its approach is focused in developing tailor-made integrated programs to help the local governments to better manage these financial risks, through the implementation of different innovative financing instruments and mechanisms, such as the Contingent Credit Facility and the Natural Disaster Insurance Facilities.
“Currently, the Bank is working with 13 member countries to support their efforts to improve their disaster risk management capability and efficiency,” an IDB statement said.
“Through the mentioned facilities, it is expected to provide during 2011 more than US$500 million in financing to help the region meet extraordinary expenditures that may arise during emergencies caused by natural disasters of severe or catastrophic magnitude.”
The IDB has already approved a $100 million loan for the Dominican Republic and during the year it will consider further contingent loans for Peru, Ecuador, Costa Rica, Panama and Honduras, totaling US$500 million.
In addition, the IDB is expected to provide a US$24 million loan to structure and launch an Insurance Facility for Catastrophic Natural Disaster Emergencies for the Dominican Republic.
The proceeds of the IDB contingent loans will allow governments to cover extraordinary expenditures that occur during the emergency in the immediate aftermath of a major event, including emergency medical equipment, vaccines and medication, facilities and equipment for temporary shelters, food for displaced people and livestock, emergency workers to assist victims, and short-term leasing of energy, transportation and communications equipment and facilities.
Financial disaster preparedness is a growing concern in Latin America and the Caribbean. Last year the region saw devastating earthquakes in Chile and Haiti and an active hurricane season. In addition, the La Niña-related weather phenomenon has brought severe flooding to Guyana, Venezuela, Colombia and Brazil, among others.