IDB Launches Disaster-Risk Instruments and Expands Coverage by $2 Billion

SEVILLE — The Inter-American Development Bank (IDB) and IDB Invest are scaling up financial solutions to help countries and companies manage disaster-related risks and strengthen long-term resilience. This expansion includes an increase in disaster-risk coverage and new instruments for both sovereign and private clients: 

• Expanded Protection for Countries for disaster-risk coverage by an additional $2 billion through the Contingent Credit Facility and Climate Resilience Debt Clauses, responding to rising demand across the region.
• A pioneering Regional Disaster-Risk Transfer Program, led by the IDB, to help countries transfer extreme-event risk to insurance and capital markets.
• A new private-sector Business-Resilience Program from IDB Invest, introducing next-generation debt clauses that protect investments from a wider range of shocks.

“We are scaling up financial protection to help countries and companies manage disaster risks more effectively,” said IDB President Ilan Goldfajn. “With these new tools and coverage, we are strengthening resilience, accelerating recovery, and making sure that financing is available when it’s needed most.”

This expansion builds on the IDB’s regional program "Ready and Resilient Americas,” launched in March to improve collaboration, readiness, and financial protection against disasters across Latin America and the Caribbean.

Expanded Protection for Countries

The IDB is expanding its disaster-risk coverage by $2 billion – $1 billion for its Contingent Credit Facility for Natural Disasters and another $1 billion through Climate Resilience Debt Clauses. 

Under the Contingent Credit Facility, the IDB is increasing the number of eligible countries and raising coverage by $1 billion to reach $5 billion in total protection in 2026. The facility provides quick-disbursing liquidity to help deliver humanitarian relief, restore basic services to the population, and enact other response measures in the wake of severe disasters or health crises.

Additionally, the Bank is also scaling up its Climate Resilience Debt Clauses, which allow eligible countries to pause debt payments in the event of a qualifying disaster. By 2026, the IDB will provide $4.2 billion in total coverage, including $1 billion in new protection. These clauses allow for a temporary pause on debt-service payments in the event of qualifying natural disasters, freeing up critical fiscal space for emergency response and recovery efforts.

Regional Disaster-Risk Transfer Program

The new IDB-led program will support countries – particularly small and vulnerable economies with limited market access – in transferring disaster risk from events such as hurricanes, floods, droughts, earthquakes, and wildfires to the reinsurance and capital markets. 

In response to strong demand, initial support will be provided to Belize, Honduras, and Panama, with expansion planned for other countries and through regional risk-pooling mechanisms. Spain and France have expressed interest in supporting the initiative.

Private-Sector Business-Resilience Program

IDB Invest is launching a first-of-its-kind MDB mechanism to protect private investments from a broad range of external shocks that affect business continuity. These debt clauses allow for principal deferrals and tenor extensions of up to two years, helping de-risk transactions and unlock greater private investment in sectors such as agribusiness, infrastructure, energy, and tourism.

While some commercial lenders have introduced similar tools for climate-related risks, IDB Invest is the first multilateral institution to design and deploy a resilience mechanism covering a wider spectrum of shocks – setting a benchmark for innovation in development finance.