WASHINGTON, May 3, 2017— Serbia will be better equipped to rapidly respond to its population in the aftermath of a natural disaster thanks to a new, €66.1 million loan approved today by the World Bank Board of Directors. The loan will provide the government with immediate access to financial resources to meet emergency and recovery needs once an emergency is declared, ensuring that budget resources are not diverted from ongoing programs.
The Disaster Risk Management Policy Loan with a Catastrophe- Deferred Drawdown Option (CAT-DDO) is the first loan of its kind in Europe from the World Bank, building on previous experience from other regions. The loan will provide Serbia with rapid access to funding to deal with a natural disaster and help strengthen the country’s institutional and legal framework to effectively manage the physical and fiscal impacts of natural disasters. The loan will also increase the technical capacity for planning and implementing post-disaster and climate change response activities.
“Serbia is experiencing more frequent and more severe natural disasters, like the devastating floods of 2014. When such a disaster hits, poor people are usually most affected,” says Ellen Goldstein, World Bank Director for the Western Balkans. “This operation provides Government with the tools to immediately help people in the wake of a disaster. With this kind of loan in place, countries can instantly access cash as soon as a catastrophe occurs.”
Serbia is vulnerable to a wide variety of natural disasters, including floods, landslides, droughts, and earthquakes. Recent studies indicate the country is particularly vulnerable to future changes in climate and precipitation, with weather-related events expected to become more frequent and intense.
The new loan complements existing World Bank and donor-supported initiatives to strengthen Serbia’s ability to manage the impact of natural and man-made disasters, such as floods.
“Since the 2014 floods, the government of Serbia has become proactive in reducing risks,” says Joaquin Toro, Senior Disaster Risk Management Specialist. “This operation is part of a broader national program aimed to avoid and reduce risk and respond more efficiently to disasters. Making financial resources available to respond to disasters will allow the Government to provide faster aid to populations in need. The Government of Serbia has implemented in three years what took some other countries decades to achieve.”
The CAT-DDO has a revolving feature, allowing money that is repaid prior to the closing date to become available for subsequent use. The drawdown period will be three years and may be renewed up to four times.
The World Bank Group is a prominent development partner of Serbia, providing financing, analyses and advisory services. The World Bank Group has a large lending and guarantee portfolio in Serbia, including International Bank for Reconstruction and Development financing of US$1.65 billion, an International Finance Corporation Portfolio of US$230 million, including funds mobilized from its partners, and a Multilateral Investment Guarantee Agency portfolio of US$807 million.