Emergency Loans

In addition to financing investment projects and policy reforms, the IDB provides loans to help countries cope with financial or economic crises and natural or other disasters through its Emergency Lending Program.

In the case of a financial or economic crisis, the Bank requires the emergency loan to fit within a macroeconomic stabilization program that, at a minimum, has been endorsed and is subject to periodic surveillance by the International Monetary Fund. Disbursement periods are significantly shorter than for other IDB financial instruments and can range up to 18 months.

Emergency loans from the Bank may be applied to support national, provincial, state and municipal governments and autonomous public institutions. Emergency loans are in US dollars with an interest rate tied to the six-month U.S. dollar LIBOR rate, plus 400 basis points. They have a five-year term and a three-year grace period. Local counterpart funding is not necessary.

In the case of natural or other disasters, the emergency lending program is known as the Emergency Reconstruction Facility or Immediate Response Facility for Emergencies Caused by Natural and Unexpected Disasters.

The Emergency Reconstruction Facility can use up to $20 million of the Ordinary Capital or up to $10 million of the Fund for Special Operations to assist a country stricken by a catastrophic disaster with covering the immediate expenses of restoring basic services to the population. The facility enables resources to reach affected populations in the first few weeks after the disaster takes place.

The Bank also offers support to countries investing in reducing their vulnerability to natural disasters. This includes a Disaster Prevention Sector Facility of up to $5 million to assist countries with taking an integrated approach to reducing and managing their risk.