Millions of dollars in “immediate” funding could become available to Barbados in the next hurricane season if the island takes another hit from a major storm.
World Bank officials are now in discussion with Government to finalise the details of the support, which would be facilitated through the international financial institution’s Catastrophe Deferred Drawdown Option (Cat DDO) loan programme.
Lilia Burunciuc, World Bank country director for the Caribbean, outlined this in an interview, stressing that “this is what governments need when the disaster happens – financial resources to be able to respond”.
The Cat DDO instrument is designed to provide immediate liquidity to support a country’s efforts to recover from disasters triggered by natural hazards or a public health emergency.
Under one with St Vincent and the Grenadines, the World Bank disbursed US$20 million to support the government’s response to the crisis posed by the La Soufrière volcano eruption in April 2021.
Grenada’s government also accessed US$20 million from its Cat DDO in the aftermath of damage from Hurricane Beryl last year. With Barbados now able to regularly access World Bank support for the first time in 30 years, it can utilise a Cat DDO and other loans and services from the institution, Burunciuc said.
“So we’re preparing these contingent financing operations – Cat DDOs – now in many other countries, including in Barbados, [where] we are preparing one for the next hurricane season,” she said.
“It’s in the preparation, but it’s quite advanced and we hope that before the next hurricane season, Barbados will also have a Cat DDO from the World Bank, ready, negotiated and in case of the need, resources will be available to be utilised.”
She explained that the World Bank’s talks with Government on the Cat DDO included “the policy measures that Government is taking”.
“The Government has already taken quite a lot of these policy measures on strengthening the disaster risk management in the country. The resources for the project still have to be negotiated and then approved by our board,” Burunciuc added.
In terms of the amount of funding to be made available, she said: “We are working with the Government on that.”
Elaborating on the value of a Cat DDO for countries which were vulnerable to natural disasters like hurricanes, the World Bank official noted that “it’s an instrument where we help the government improve the overall disaster risk preparedness and regulatory environment, and at the same time we have resources available in case a disaster hits, which are dispersed immediately after the disaster occurs”.
“It’s very fast dispersing, within 48 hours you can have the money available, but they [governments] have to ask for these resources,” she said.
“Grenada . . . received significant resources from the CCRIF (Caribbean Catastrophe Risk Insurance Facility). It took a bit of time for them to see whether they needed these additional [Cat DDO] resources – it’s borrowed resources.”
Burunciuc emphasised how important it was for countries like Barbados to “put in place mechanisms to deal with the disasters after they happen”.
“We [the World Bank] are investing a lot in strengthening the resilience of the countries so that the damages are minimised and the countries are better prepared to respond to these disasters in the future,” she said.
“And we’re implementing these programmes throughout the Caribbean, for example, also as part of an MOU that we have with Inter-American Development Bank. We do have quite a large programme in disaster risk management and it involves different type of engagements. It involves strengthening the infrastructure, it involves improving the whole disaster risk management policy environment, better building codes, zoning, disaster preparedness and investing in nature-based solutions to reduce the impact from disasters.
“We’re also helping with early warning systems, helping the governments to implement also good disaster risk finance strategies, and providing financing instruments to the governments to be able to respond,” Burunciuc said.
