Honduras will receive a $75 million credit line from the Inter-American Development Bank to support the implementation of an integrated strategy for managing the risk of natural disasters.
A first $19 million loan within the conditional credit line for investment projects (known as CCLIP) will finance efforts to reduce the losses occasioned by recurring natural hazards through investments in prevention, mitigation and emergency response actions.
Honduras will also use the resources to strengthen institutions and build local disaster risk management capacity. Authorities will implement risk reduction measures in the most vulnerable municipalities, establish risk management plans, construct mitigation works and improve interagency coordination under the Integrated Disaster Risk Management Program in Honduras.
The IDB Board approved the CCLIP and the first loan June 24. Subsequent individual loans will be considered for reducing, avoiding or transferring risks that arise with varying frequencies. The CCLIP will have a term of 10 years to allow the government to achieve measurable results in applying its integrated risk management strategy for natural disasters.
The historic vulnerability of Honduras to natural disasters such as floods, droughts, and hurricanes has increased dramatically in recent decades, with nominal losses estimated at $4.7 billion, or nearly half the total losses for all Central America since 1974. The CCLIP will help generate conditions for effective disaster risk management to cope with potential negative economic impacts from increasing natural disasters due to changes in land use patterns, increased population density, environmental degradation and the effects of climate change.
This CCLIP is consistent with the IDB’s integrated approach to managing risks from natural disasters in response to the region’s needs. This approach includes:
The development of a System of Indicators for Disaster Risk Management for monitoring progress and assessing the effectiveness of loan operations;
The development of risk assessments with estimates of maximum probable losses and economic impact, as well as vulnerability maps under the Central American Probabilistic Risk Assessment (CAPRA) initiative;
Technical assistance to the Council of Secretaries and Ministers of Finance of Central America, Panama and the Dominican Republic (COSEFIM) for developing a regional insurance facility against natural disasters and designing mechanisms for better control of contingent fiscal liabilities for disaster risk management.
Finally, the Bank has developed and is beginning to operate a Contingent Credit Facility for Emergencies from Natural Disasters for a total amount of $600 million.
Today’s first individual loan is made up of a $13.3 million loan for 30 years, with a 5.5-year grace period, and a $5.7 million loan for 40 years, with a 40-year grace period.