The Philippines is set to receive ready financing that can be tapped to rapidly respond to disasters and climate threats after the World Bank (WB)’s Board of Executive Directors approved on November 16, 2023, a US$ 500-million development policy loan for the country.
The World Bank Group’s lending arm, the International Bank for Reconstruction and Development (IBRD), will finance the Philippines Disaster Risk Management and Climate Development Policy Loan with a Catastrophe Deferred Drawdown Option (DDO), which has set aside US$ 500 million that the Philippine government can immediately draw upon in times of natural disasters and health crises, mitigating their impact on the economy.
The funds can be disbursed when the President declares a State of Calamity in response to a natural disaster or public health emergency.
The full amount of the financial support will be available for three years, allowing the government immediate access to the funds to better manage the cost of shocks and protect vulnerable sectors.
In addition, it has a revolving feature, as well as a three-year drawdown period which may be renewed up to four times, for a total maximum period of 15 years.
According to the 2023 World Risk Index, the Philippines continues to be the most at-risk country in the world in terms of exposure to natural disasters.
On a scale of zero (very low risk) to 100 (very high risk), the Philippines scored 46.86 in 2023 – the highest among the 193 countries, according to the report. The country has held the top spot since 2011.
Considering the country’s high susceptibility to disasters and climate change impacts, President Ferdinand R. Marcos, Jr. has placed greater priority on strengthening the country’s disaster resilience and response. Chapter 15 of the Philippine Development Plan (PDP) 2023-2028 focuses on accelerating climate action and strengthening disaster resilience in the Philippines.
“The Philippines will greatly benefit from the development policy loan as one of the most disaster-prone countries in the world. The drawdown feature is particularly helpful as it allows the quick disbursement of funds upon the declaration of a state of calamity by the President, providing the government immediate liquidity to rapidly deliver crucial services – such as healthcare, shelter, and food, in times of emergency,” Finance Secretary Benjamin E. Diokno said.
Apart from disaster response, the development policy loan ensures that the Philippine government has the resources to prepare and strengthen key sectors, such as education and health, to withstand future crises.
To date, total approved commitments from the IBRD to the Philippines for the fiscal year 2024 amount to US$ 1.1 billion.
The IBRD is the largest development bank in the world that provides loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries.