The World Bank Group’s new Crisis Preparedness and Response Toolkit is an innovative suite of tools to help developing countries better respond to crises and prepare for future shocks. This toolkit aims to empower these countries in the face of crises, driving impactful development and ultimately contributing to achieving a world free of poverty on a livable planet.
The toolkit fills knowledge gaps, drawing on lessons learned from previous responses to crises. It also substantially expands the tools available to countries to ensure more comprehensive protection in times of crisis.
The new toolkit will offer the following countries:
Fast access to financing for emergency response through flexible resource reallocation. This will include the Rapid Response Option, which allows countries to quickly repurpose a portion of their unused Bank financing across their portfolio to address emergency needs during a crisis.
Substantially scaled-up access to pre-arranged and quick new financing for emergency response. The Bank will provide more flexibility to help countries put in place more contingent resources to be better prepared for future crises. It will also expedite access to new financing for budget support when disasters hit, giving countries immediate access to money to manage the impact of a disaster and support their citizens. For example, the Bank is increasing access to contingent budget support financing for disaster response by increasing the country limits on Development Policy Financing Catastrophe Draw Down Option DPF Cat DDO (IBRD and IDA), with a Scalable DPF feature to increase disbursements related to the DPF Cat DDO if a substantial shock occurs. It also formalizes Investment Policy Financing with a DDO feature (IPF DDO) to offer contingent financing in the event of a particular anticipated shock.
Countries can leverage these new tools further by undertaking crisis preparedness reforms and other institution-strengthening measures. This will foster resilience in the long run.
Expanded catastrophe insurance. The World Bank Group will offer all countries the option of embedding catastrophe bonds, insurance, and other risk management products into their Bank financing operations. Governments could then be eligible for a payout from insurance mechanisms in a crisis without taking on more debt.
Climate Resilient Debt Clauses (CRDC). The World Bank Group has expanded the CRDC to cover all existing loans in eligible countries, allowing borrowers to defer interest and fee payments, and enabling fees to be covered by concessional resources. This will allow small states to prioritize disaster recovery over debt repayment when catastrophes hit so they can focus on maintaining access to clean water, food, and power instead of paying loan bills.
This suite of new tools marks a significant step in the World Bank Group’s extensive efforts to strengthen crisis preparedness and resilience. For instance, we are increasingly helping countries assess the risks they face through our Country Climate and Development Reports. Our new approach to Paris Alignment means we now screen 100 percent of our operations for climate resilience. Our strengthened country engagement model will support country investments and reforms to enhance crisis preparedness.
The World Bank actively engages with client countries to implement the Crisis Toolkit:
- As of July 2, seven countries (Philippines, Malawi, Morocco, Romania, Grenada, St. Lucia, and Belize) have already signed an omnibus amendment that establishes the Rapid Response Option in their countries.
- More than a dozen other countries have expressed interest and are working closely with the Bank team to prepare the RRO omnibus amendments.
- The Rapid Response Option enables a borrowing country to access up to 10 percent of undisbursed balances in its IBRD or IDA portfolio for rapid response after an emergency occurs.
- Malawi and Burundi have also established new Investment Project Financing with a Deferred Drawdown Option feature (IPF DDO).
- Countries with Development Policy Financing with a Catastrophe Deferred Drawdown Option feature (DPF Cat DDO) are benefitting from the expanded flexibilities. Cat DDOs are prepared in other countries, and close engagement is also underway with several countries on the Contingent Emergency Response Project (CERP).