The Department of Finance (DOF) plans to trigger the $500-million standby loan facility from the World Bank to support ongoing disaster relief and rehabilitation efforts in regions devastated by typhoon “Ompong,” once President Duterte acts on a recommendation from the economic team and the National Disaster Risk Reduction and Management Council (NDRRMC) to declare a state of calamity in the affected areas, said Secretary Carlos Dominguez III.

Dominguez said the WB’s Second Disaster Risk Management Development Policy Loan With A Catastrophe Deferred Drawdown Option (CAT-DDO2) will provide the government immediate liquidity to help fund its disaster relief and reconstruction efforts, and can be immediately accessed 48 hours after the President’s declaration of the state of calamity.

A presidential declaration of a state of calamity is required to trigger the release of the funds available under the WB loan facility.

According to Dominguez, the Office of Civil Defense (OCD) convened a technical working group (TWG) last Tuesday (Sept. 18) and agreed to finalize a draft resolution endorsing to the NDRRMC a state of calamity in the Ilocos Region, Cagayan, Central Luzon and the Cordillera Administrative Region (CAR). The NDRRMC would then have to approve the recommendation for the presidential declaration of a state of calamity.

The loan facility, net of the 0.5 percent front-end fee, has an available balance of $497.5 million as of end-August 2018, Dominguez said.

A presidential state of calamity has not been declared since the second CAT-DDO was extended by the World Bank in 2015, thus leaving this fund untouched.

As provided under the Disaster Risk Reduction and Management Act (Republic Act 10121), a presidential declaration of a state of calamity can be national or part of the territory, in clusters of barangays, municipalities, cities, provinces or regions.

On the recommendation of National Treasurer Rosalia de Leon, Dominguez said the DOF, as executing agency, decided to tap the CAT-DDO-2 facility in the aftermath of typhoon “Ompong.”

Under this CAT-DDO-2 extended by the WB, the government can draw up to the full loan amount at any given time within three years of its implementation coverage.

The loan under this facility is payable in 25 years, inclusive of a 10-year grace period with an interest rate based on the current US dollar 6-month LIBOR plus an applicable variable spread.

“Compared to an issuance in the dollar space for a similar amount and tenor, the CAT-DDO costs less annually,” De Leon said.

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