The World Bank Group’s expanded Crisis Preparedness and Response Toolkit is an innovative suite of tools to help developing countries better respond to crises and prepare for future shocks. The Bank Group is rolling out this Toolkit to empower countries in the face of crises, driving impactful development and ultimately contributing to achieving a world free of poverty on a livable planet.
The Crisis Toolkit fills gaps based on lessons learned from previous crisis response and substantially expands tools available to countries to ensure comprehensive protection in times of crisis. The newest tools will offer countries:
Fast access to cash for emergency response, which will be done through flexible resource reallocation. This will include the Rapid Response Option, allowing countries to quickly repurpose a portion of their unused Bank financing across their portfolio to address emergency needs when a crisis occurs.
Substantially scaled up access to pre-arranged and quick new financing for emergency response. The Bank will provide new flexibility to help countries put in place more contingent resources in preparation to future crises. It will also expedite access to new financing for budget support when disasters hit, equipping countries with immediately accessible money to manage the impact of a disaster and support their citizens. Countries will undertake crisis preparedness reforms and other institutional strengthening measures to further leverage these new tools, which will foster resilience in the long run.
Expanded catastrophe insurance. The Bank Group will offer all countries the option to embed catastrophe bonds, insurance, and other risk management products into their Bank financing operations. Governments then could be eligible for a payout from an insurance mechanism in the event of a crisis, without having to take on more debt at that time.
Climate Resilient Debt Clauses (CRDC). The 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. We are increasingly helping countries assess the risks they face through our Country Climate and Development Reports, for instance. 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.
We are also ramping up our work with private sector clients. The International Finance Corporation is designing a private sector-led crisis response solution to help financial institutions mitigate the impact of natural disasters resulting from climate change. The Multilateral Investment Guarantee Agency is working with lenders and the private insurance industry to better integrate the impacts of climate change on loans to the public sector with instruments such as parametric risk insurance.