The Government of Nepal and the World Bank have formalized a US$150 million financing agreement aimed at enhancing Nepal's disaster response capabilities. The agreement, signed on October 23, provides contingent financing for natural or climate-induced hazards or health emergencies.
This initiative, known as the Nepal Disaster Resilience Development Policy Credit with Catastrophe Deferred Drawdown Option (Cat DDO), focuses on policy and regulatory reforms to bolster disaster resilience. It aims to improve early warning systems and establish frameworks for risk reduction in critical infrastructure, while also preparing for public health emergencies.
The signing ceremony included Ram Prasad Ghimire, Secretary of the Ministry of Finance, and David Sislen, World Bank Regional Country Director for Maldives, Nepal, and Sri Lanka. Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel and World Bank Vice President for South Asia Martin Raiser were also present.
"The Cat DDO is important for Nepal as it helps address climate-related as well as other natural catastrophe and health-related crises by providing contingency financing," stated Ram Prasad Ghimire. He emphasized its role in enhancing crisis preparedness by offering immediate liquidity during fiscal pressures.
David Sislen remarked that "the Cat DDO is an innovative disaster risk financing instrument that can help the government respond quickly to emergency needs without diverting resources from its ongoing development programs." He highlighted its potential to strengthen governmental capacity in disaster risk mitigation.
Technical assistance is provided by the Global Facility for Disaster Risk Reduction and Recovery (GFDRR) along with support from various international agencies including USAID and the Swiss Agency for Development and Cooperation (SDC).