Financing Mechanisms


Disaster Prevention Fund (GN-2405-3)

The main objective of this Fund is to provide non-reimbursable financing for disaster risk management activities and the preparation of disaster prevention projects that will benefit all Bank borrowing member. The Fund will have a total amount of US$10 million from Ordinary Capital resources. It will receive an initial allocation of US$4 million during 2006. The maximum amount for individual projects is US$1 million. The financing will be complemented by additional resources through a parallel multidonor trust fund.

Disaster Prevention Fund. Operational Guidelines (CC-6077-1)

The objective of these operational guidelines is to establish the procedures for the use of resources in order to achieve the objectives of the Disaster Prevention Fund. The objectives of the Fund are to: (i) support countries to manage risks related to natural hazards by reducing vulnerability, and by preventing and mitigating disasters before they occur; (ii) leverage knowledge, good practice, tools and government commitment for risk management solutions; and (iii) provide a vehicle for developing a shared approach to supporting disaster risk management in the region.

Disaster Prevention Sector Facility

This document (GN-2085-5) was favorably considered by the Bank's Board of Directors on March 12, 2001

The Sector Facility, in particular, will assist countries to take an integrated approach to reducing and managing their risk to natural hazards before a disastrous event through the following components: (1) Risk identification and forecasting to understand and quantify vulnerability and disaster risk; (2) mitigation to address the structural sources of vulnerability; and (3) preparedness to enhance a country?s readiness to cope quickly and effectively with an emergency. Financing will also be made available for (4) building risk transfer measures to spread financial risks over time and among different actors and (5) establishing effective national systems for risk reduction.

Inmediate Response Facility (GN-2038-14)

The Bank is already assisting countries in responding quickly to natural disasters. The primary existing mechanism is the IRF. The purpose of the IRF is to very quickly make available resources (up to US$ 20 million) to finance a pre-established menu of eligible activities. These include help in speeding up the restoration of services, financing temporary repairs, and cleaning up in the early period after a disaster. The country?s request for the use of these funds triggers a fast-track process of loan approval at Bank headquarters. Five such operations have been approved since the ERF?s inception (Colombia, Venezuela, Belize, and two in El Salvador).

The IDB is currently undertaking an evaluation of its Inmediate Response Facility, specifically as it relates to the Banks policy on Unexpected and Natural Disasters. The output will be a report on the facility and recommendations for its future form.

Regular Loans

The Bank provides regular loans to finance prevention and mitigation measures, through such programs as watershed management, urban development projects and social development operations. There are also examples of loans in other sectors, but including prevention and mitigation components, currently in execution. Ex-post funding is available to borrowing member countries through reconstruction loans. In addition, resources from existing loans may be redirected to fund rehabilitation investments after a disaster.

Discretionary Technical Cooperations

The IDB Country Representative has additional resources at his/her discretion. Among other things is the possibility to authorize up to US$ 200,000 of technical cooperation funds for immediate emergency response activities. In 2004, ten countries received technical cooperations through this mechanism for a total of USD 1.2 million.