Deferred Drawdown Option for Catastrophic Risks

A Cat DDO is a policy-based financing operation that supports policy reforms aimed at enhancing disaster risk management. It is a contingent financing modality that provides rapid resources once a natural disaster or public health emergency event occurs. Operation processing, policy dialogue, and requisite reforms are completed in advance, ensuring immediate access to financing when needed.

The country limit is set at $1 billion or 1% of GDP, whichever is less. Upon full disbursement of a PBF Cat DDO, the operation may be scaled up to address unanticipated funding needs arising from a catastrophe up to 100% of the original PBF Cat DDO financing amount. Such increase may be accommodated through the reallocation of up to 10% of the country’s undisbursed loan balances.

Drawdown Period: Initially, three years. It may be renewed up to four times, for a maximum of 15 years in total. 
 

Examples 

Provides rapid budget support to a country following a hurricane, earthquake, flood, or public health emergency, helping authorities respond quickly while protecting essential public services and development gains.

Supports reforms to strengthen disaster preparedness, risk governance, financial protection, and emergency response systems before an emergency occurs, while ensuring immediate access to liquidity once the event materializes.