Sri Lanka has become the first South Asian country to access an innovative form of World Bank financing that provides immediate payouts after natural disasters, the organization said in a statement on Thursday.
Approved by the World Bank's Board of Executive Directors, the 102 million U.S. dollars Development Policy Loan with a Catastrophe Deferred Drawdown Option (DPL with a CAT DDO) is a line of credit that can be drawn on partially or in full if a country declares a state of emergency after a natural disaster.
The facility was approved by the Board along with a 110 million U.S. dollar Climate Resilience Improvement Project (CRIP), which will finance both short and long term interventions to reduce climate and disaster risk.
"The World Bank's current total net commitments in Sri Lanka stand at 1.38 billion U.S. dollars, distributed across 20 activities," the statement added. "Poor people are usually the first to suffer in natural disasters and they do not have the resources to cope with the losses in income or property," said Francoise Clottes, World Bank Country Director for Sri Lanka.
"The package of financial support, including a first of its kind facility for South Asia, will help the government of Sri Lanka to respond more effectively to help people suffering from a natural disaster while ensuring that financial support remains intact for the country's programs to overcome poverty and increase shared prosperity."
The DPL with a CAT DDO facility was first launched by the World Bank in 2008, with the first users being middle-income countries in Latin America and the Caribbean.
The Board has since approved DPL with a CAT-DDO in the Philippines, Costa Rica, Colombia, El Salvador, Guatemala, Panama and Peru. Sri Lanka's status as the first country in South Asia to access the facility reflects its rise as a middle-income country and increasingly sophisticated development needs.
During the period 2000 to 2010, floods cumulatively affected more than 8.5 million people, while droughts have affected more than five million. In addition, landslides and high winds frequently destroy or damage thousands of houses every year.
Droughts have also become more frequent with key economic activities being affected almost every other year.