The World Bank Group has expanded its support for countries rebuilding after disasters, allowing small and vulnerable states to defer loan and interest repayments following catastrophic events. This initiative enables governments to prioritize recovery efforts over debt payments.
The Climate Resilient Debt Clause (CRDC) from the World Bank now includes all natural disasters, such as droughts, floods, and pandemics. Previously, only tropical cyclones and earthquakes were covered. Eligible countries can postpone principal or interest repayments on IBRD and IDA loans for up to two years.
"By significantly expanding the scope to cover all catastrophes, we are helping vulnerable countries to access more meaningful support quickly. In times of crisis, leaders need a reliable partner that has their back. The World Bank wants to be that partner," said World Bank Group President Ajay Banga at COP29 in Baku.
Currently, 14 out of 45 eligible countries have incorporated this clause into their loan agreements. St. Vincent and the Grenadines is one country that used the deferral option after Hurricane Beryl. There are no costs for borrowers as any fees associated with the CRDC are covered by concessional resources.
The CRDC aims to make disaster response more relevant for nations facing various natural hazards while simplifying the process for applying for repayment delays during catastrophes.
This clause is part of a larger set of tools within the World Bank's Crisis Preparedness Response Toolkit designed to help countries manage the aftermath of natural disasters. The toolkit also provides measures for redirecting financing towards emergency operations.
For further information, contact Sue Pleming in Washington at +1 (202) 981-8929 or via email at spleming@worldbank.org; or Melissa Bryant in Baku at +1 (202) 891-9397 or mbryant@worldbankgroup.org.