The World Bank Board of Executive Directors approved yesterday US$40 million for the Second Fiscal Reform and Resilience Development Policy Credit with Catastrophe Deferred Drawdown Option (Cat DDO) for Saint Vincent and the Grenadines. The quick-disbursing operation supports the country’s program to strengthen fiscal sustainability and enhance climate and disaster resilience to future shocks. It also supports Saint Vincent and the Grenadines’ response to the COVID-19 pandemic. A $20 million Cat DDO component provides a contingent line of financing in case of future natural or health-related disasters.
“This operation supports the efforts of Saint Vincent and the Grenadines to maintain fiscal resilience and protect lives and livelihood during the COVID-19 pandemic, which has led to severe socio-economic impacts.”
“The contingent financing component protects people against the effects of a natural disaster and helps the country become more disaster-resilient,” said Tahseen Sayed, World Bank Country Director for the Caribbean.
Saint Vincent and the Grenadines has been affected by loss of economic activity due to the COVID-19 prevention measures. The country is also at high risk of natural hazards, especially hurricanes. This new financing supports reforms that strengthen the legal and institutional frameworks for disaster risk management, protect jobs and livelihoods, and enhance fiscal resilience. The operation also supports reforms to protect the country’s coastal and marine assets by supporting sustainable use of natural resources.
This is the second in a series of two fiscal resilience development policy credits for Saint Vincent and the Grenadines. The financing, which is from the International Development Association (IDA), is interest-free with a maturity of 40 years, including a grace period of 10 years. The Cat DDO funds will be available to be partially or fully drawn down after a declared emergency within the next three years and it can be renewed for an additional three years.
World Bank Group COVID-19 Response
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. “We are increasing disease surveillance, improving public health interventions, and helping the private sector continue to operate and sustain jobs. Over the next 15 months, we will be deploying up to $160 billion in financial support to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery, including $50 billion of new IDA resources in grants or highly concessional terms,” the institution said.
But when things were at their lowest point, the World Bank stepped in to help developing countries and those most in need of financial aid. Between March and June, the World Bank mobilized around $1.5 billion to support countries during this difficult time – providing rapid response support through project financing, technical assistance, and policy advice. This support is designed to help countries boost health care systems, deliver support to small businesses, protect jobs and provide social protection for the most vulnerable, including the large aging population in the region.
Using the World Bank’s emergency funding, countries like Bosnia and Herzegovina, Georgia, Moldova, Tajikistan, and Uzbekistan are rolling out safety-nets programs and other measures to support the livelihoods of those who hit hardest.
The World Bank is leveraging countries’ existing social protection systems to help families and businesses restore income, preserve livelihoods, and compensate for increasing prices and unexpected medical expenses. The emergency funds are helping governments provide temporary cash transfers, health care subsidies, targeted social payments and one-off unemployment benefits.
The breadth and scope of the health and social challenges brought on by the pandemic are devastating – threatening the health and safety of every person living in Europe and Central Asia. And the economic consequences are just as bad.
Over the past three months, the World Bank Group has mounted the fastest crisis response in its history. While this fight is challenging, we are committed to support countries in Europe and Central Asia to ensure that people like Alisher have the chance to withstand the crisis and get back on their feet – the sooner the better.