With the outbreak yet to be contained, the COVID-19 crisis is steadily amassing damages across various sectors such as health, transportation, trade, tourism, to name a few. While the impact/pressure to agriculture sector is less pronounced, disruption in the value chains has been observed in dynamics of food supply and demand in conjunction of reducing purchasing power, logistical barriers and trade blockages. With the start of typhoon, monsoon and hurricane season in different parts of the world as well as weather uncertainty in the upcoming crop seasons in arid and semi-arid regions, developing countries, that are often agriculture-dependent and resource-constrained, will likely suffer additional vulnerabilities from a double shock.

Against this backdrop, on April 2, 2020, the World Bank’s Board of Executive Directors approved a first set of emergency support operations for developing countries around the world, using a dedicated, fast-track facility for COVID-19 response. The World Bank Group is prepared to deploy up to $160 billion over the next 15 months to help countries respond to immediate health consequences of the pandemic and assist economic recovery. Notably, financial resources are also deployed in existing WB projects through restructuring, use of emergency components of existing projects (Contingent Emergency Response Components - CERCs) and triggering of Catastrophe-Deferred Drawdown Options (CAT-DDO’s).

CAT DDO is a Development Policy Financing (DPF) instrument that provides immediate contingent credit (i.e. access to fund within 48 hours triggered by a declaration of state of emergency) to member countries to rapidly meet their financing requirements following a shortfall in resources due to disasters with devastating consequences on people, infrastructure, assets and entire economies. COVID-19 fits to this category as health outbreak. More than just emergency borrowing, countries in CAT DDO programs must commit to policy reforms and actions designed to strengthen disaster risk management capacity to reduce its impact. For more information, please read here.

Of the 17 active Cat DDOs totaling $2.4 billion, 10 countries have triggered their Cat DDO for the COVID-19 emergency, providing over US$1.5 billion in immediate financing. 13 more countries are preparing to implement Cat DDOs to improve disaster preparedness and liquidity needs during the crises. For latest update, please visit here and here.