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WASHINGTON – The World Bank’s Board of Executive Directors has approved today a new contingent line of credit to help strengthen the Philippines’ institutional and financial capacity to manage risks from climate change, natural disasters, and disease outbreaks.

The Fourth Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option (CAT-DDO 4) provides US$500 million funding that the Philippines can quickly tap to manage financial impacts brought about by disasters and disease outbreaks.

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“This contingent funding mechanism protects the Philippines’ fiscal health following natural disasters and disease outbreaks, helps develop sustainable risk financing mechanisms for local government units, and cushions poor and vulnerable households from the impact of disasters,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand. “If not managed well, these shocks can exacerbate poverty through the loss of lives, destruction of assets, disruption of economic activities and trade, and indirect impacts on health, mobility, and access to education.”

The country can access funds upon the declaration of a State of Calamity by the Republic of the Philippines due to an imminent or occurring natural catastrophe or a declaration of a State of Public Health Emergency.

The full amount of the loan is available for three years after effectiveness of this project. This gives the government access to immediate liquidity to better manage the cost of shocks and protect the Filipino population. The government can renew this line of protection with the World Bank for up to a total period of 15 years.

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This new lending operation supports on-going government efforts to strengthen disaster response and recovery policies and planning. This includes mainstreaming the use of pre-approved Disaster Rehabilitation and Recovery Plans to speed up access to funding from the national government for post-disaster recovery.

In the aftermath of disasters, skilled workers in areas like construction, welding, electrical installation and maintenance, pipe-laying, heavy equipment operation, and food production are crucial for reconstruction and rebuilding. Part of the program will support strengthening delivery of community-based technical and vocational training.

This CAT-DDO4 also supports government efforts to integrate climate risk management in the preparation of provincial commodity investment plans among local government units (LGUs), which can lessen the extent of agricultural and fisheries damage resulting from natural hazards and extreme weather events.

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According to Lesley Jeanne Y. Cordero, World Bank Senior Disaster Risk Management Specialist, the policy reforms supported by the CATDDO4 are especially critical with the implementation of the Supreme Court Ruling on the Mandanas Case and the coming devolution transition phase of functions identified in the 1991 Local Government Code.

“The reforms supported by the program enables local governments to take stock of climate actions, track and report climate change expenditures to inform investment planning and programming for risk resiliency,” said Cordero.

The Philippines is highly vulnerable to multiple hazards due to its unique geography.

The country is the ninth most affected country globally from extreme weather events, second highest ranked among Asian countries based on the World Risk Index 2020.

Around 60 percent of the country’s total land area and at least 74 percent of Filipinos are vulnerable to multiple hazards, including typhoons, earthquakes, floods, storm surges, tsunamis, volcanic eruptions, and landslides. Typhoons accounted for around 90 percent of the damage in recent years. In the past thirty years, 33,000 people have died, and 120 million people have been adversely affected by natural disasters. (WB PH)