$100 million contingent loan will help country cope with earthquakes, floods, and hurricanes
The Inter-American Development Bank (IDB) has approved a $100 million contingent loan to help Costa Rica cushion the impact that severe or catastrophic natural disasters could have on its public finances.
Due to its geographic location, the country is highly exposed to meteorological and geophysical threats such as earthquakes, floods, and hurricanes.
“In the past 40 years alone, Costa Rica has experienced 53 natural disasters of various types and has suffered economic losses in excess of $1.10 billion that affected 1.7 million people,” said project team leader Juan José Durante. “In addition, it is the world’s second most vulnerable country to multiple threats, with 37 percent of its total area vulnerable to three or more types of natural disasters,” he added.
The operation will provide Costa Rica with contingent financing to deal with extraordinary public expenditures brought about by a natural emergency.
Typical expenditures include medical equipment; vaccines and medications; facilities and equipment for temporary shelters; food for affected populations; costs associated with emergency personnel needed to assist victims; short-term renting of equipment and facilities for power, transportation, communications, and storage; and temporary rehabilitation of infrastructure and measures needed to restore basic services immediately after the disaster.
The loan, from the Bank’s Contingent Credit Facility for Natural Disaster Emergencies, is for a 25-year term, with a 5-1/2-year grace period, and a variable interest rate based on LIBOR.