The World Bank Group Tuesday unveiled a new loan facility for natural catastrophes, improved the terms of an existing contingency financing product and approved a 300 million dollars loan for Colombia under a new policy that significantly extends maturities.
The announcements are part of a drive by President Robert B. Zoellick to improve the World Bank's efforts to overcome poverty in middle-income countries, said a statement released by the bank.
"These financial product enhancements reflect the World Bank's commitment to using creative ways to expand resources for our country partners," said Zoellick.
"As our client relationships with middle-income countries become more sophisticated, the World Bank is responding with development solutions that share knowledge, build markets and institutions, and provide capital," he added.
The Catastrophe Risk Deferred Drawdown Option (DDO) facility, or CAT DDO, offers middle-income countries up to 500 million dollars if they suffer a natural catastrophe such as a hurricane or earthquake.
Its purpose is to provide bridge financing while other sources of funding are being mobilized. Funds will be disbursed when a country suffers a natural disaster and declares a state of emergency. Countries signing up for the facility must have a hazard risk management program in place that is monitored by the World Bank.
The World Bank also approved a 300 million dollar loan to support a loan program in Colombia for its poorest students with an average repayment maturity of around 17 years.
The loan is the first under a new policy that extends average repayment maturities to 18 years from a previous 10 years and three months to 14 years and three months, depending on per capita income, said the Bank.
(Xinhua News Agency March 5, 2008)