The World Bank's Board of Executive Directors has approved $40 million in financing to assist Bhutan in enhancing its capacity to manage climate change and natural disaster risks. The initiative, known as the Climate and Disaster Resilience Development Policy Financing with a Catastrophe Deferred Drawdown Option, aims to bolster Bhutan's institutions in safeguarding critical infrastructure, such as hydropower projects and buildings, while also strengthening early warning systems.
Mr. Lyonpo Lekey Dorji, Finance Minister of Bhutan, stated that "this operation will significantly contribute to realizing Bhutan's 13th Five-Year Plan," which focuses on mitigating disaster risks to the country's economy and infrastructure. He emphasized the importance of financial protection and immediate liquidity in responding swiftly to disasters.
Abdoulaye Seck, World Bank Country Director for Bhutan, highlighted Bhutan's vulnerability to natural disasters and climate-related hazards. He noted that the financing would help enhance the country's capacity to prepare critical infrastructure and communities for climate change impacts.
The operation includes measures for safeguarding the hydropower sector by mandating a catchment-wide approach for new projects. Additionally, it aims to increase the resilience of essential buildings across all 20 Dzongkhags through revised building regulations.
Naho Shibuya, World Bank Senior Disaster Risk Management Specialist and Task Team Leader of the operation, explained that "the financing will help strengthen the government’s early warning systems" and improve financial system resilience through international valuation standards for properties.
A Climate Resilient Debt Clause is included in this financing package, allowing Bhutan to defer principal or service charges for up to two years following eligible natural disasters or health emergencies.
Technical assistance from various funds supports this initiative, including contributions from the Climate Investment Funds and Global Facility for Disaster Risk Reduction and Recovery.