IDB expands coverage for COVID-19 and public health risks in contingent loans

The Inter-American Development Bank (IDB) is expanding the risks covered under the Contingent Credit Facility for Natural Disaster Emergencies (CCF) to include public health risks and COVID-19.

The expanded facility includes both a one-time temporary coverage of COVID-19 given the unprecedented magnitude of the present outbreak, and a longer-term ex ante coverage for future pandemics and epidemics. The expanded facility seeks to improve countries’ public contingent liabilities management. For the COVID-19 pandemic outbreak, countries can request up to $90 million or 0.6% of GDP, whichever is less. Beyond the present outbreak, countries can request coverage for future public health emergencies for up to $100 million or 1% of GDP, whichever is less. 

While the CCF is designed to guarantee the availability of funds before a disaster occurs, the IDB will offer this one-time temporary coverage of COVID-19 given the unprecedented magnitude of the pandemic and its severely damaging effects on Latin America and the Caribbean. Going forward, the CCF will continue to serve its ex-ante role and provide ongoing coverage of financial risks due to public health emergencies in the future.

This ex-ante approach to disaster risk management is designed to help countries reduce vulnerability, build capacity, and strengthen institutions and information sources for disaster preparedness and response.

The IDB created its ex ante CCF instrument in 2009 to add to the array of crisis risk management options it offers to borrowing-member countries. To date, the Bank has approved contingent financing for natural disasters for $1.9 billion through the CCF, providing a financial safety net during the emergency response phase and increased financial resilience. With the expansion of the CCF to cover public health risks, the IDB now offers ex ante financial response plans for pandemics and epidemics.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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Leslie Stone
IDB Lead Economist 

Juan José Durante
IDB Financial Markets Lead Specialist