WB instrument offers immediate liquidity in case of an adverse natural event
WASHINGTON, October 18, 2011 - The World Bank Board of Directors approved today a US$66 million development policy loan to enhance Panama’s capacity to implement its Disaster Risk Management Program for natural disasters. This operation offers Panama timely funds in the aftermath of a major natural disaster, enabling the Government to complement its own resources and quickly address emergencies and other risk reduction needs.
In the case of a disaster due to an adverse natural event and following the declaration of a State of Emergency, this operation will help Panama reduce its fiscal vulnerability by providing the Government fast access to financial resources.
The Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option (DRM DPL with a CAT-DDO) is expected to help Panama's efforts to continue on a sustainable development path by increasing the number of provinces with updated protocols for disaster preparedness and response.
“This development policy loan will help the Government’s efforts to further advance the reduction of disaster risk and its negative social, economic and environmental impacts”, said Frank De Lima, Minister of Economy and Finance of Panama. “This type of disaster risk management assistance has proved to be an effective tool in providing swift financial resources in the wake of natural disasters in neighboring countries, including Colombia, Costa Rica and Guatemala.”
According to the World Bank study “Natural Disaster Hotspots,” Panama ranks 14th in the world as most exposed to multiple hazards. Along with the rest of Mesoamerica, Panama is located on one of the most seismically active regions on earth, and is also characterized by intense and long lasting rainfalls, windstorms, floods, droughts, wildfires, landslides, tropical cyclones, and volcanic activity.
“Panama has made significant progress in the implementation of its disaster risk reduction strategy. The enactment of a Comprehensive Disaster Risk Management National Policy and the adoption of a Disaster Risk Management National Plan are critical milestones in the evolution of the disaster risk reduction agenda in the country,” said Felipe Jaramillo, World Bank Director for Central America.
Since 2003, the Government of Panama has issued 15 declarations of State of Emergency to help respond to adverse natural events, in most cases following excessive rainfall and flooding.
This risk was manifested in late 2010, when intensive rainfall caused widespread flooding, water surges and landslides, and forced the temporary closing of the Panama Canal due to the unprecedented water levels in the artificial lakes. The closing was only the third since the Canal opened in 1914, and the first due to flooding. After this national emergency, the country needed close to US$150 million to repair damaged infrastructure and restore economic activity in the areas affected by the floods.
For this development policy loan, the main counterpart of the World Bank is the Ministry of Economy and Finance, while the implementation of the program is a joint effort of the Ministry of the Interior, the National Civil Protection System and other key Ministries.
The Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option has a maturity of 15 years, including 3 years of grace period.