The World Bank says it has ex­pand­ed its life­line to Caribbean and oth­er small coun­tries strug­gling to re­build from dis­as­ters, al­low­ing them to post­pone loan and in­ter­est re­pay­ments af­ter a cat­a­stroph­ic event, so gov­ern­ments can fo­cus on re­cov­ery rather than pay­ing off debt.

The an­nounce­ment was made on Tues­day (No­vem­ber 12, 2024), at the COP29 Con­fer­ence tak­ing place in Baku, the cap­i­tal of Azer­bai­jan.

In re­sponse to feed­back from coun­tries, the Wash­ing­ton-based fi­nan­cial in­sti­tu­tion con­firmed that its Cli­mate Re­silient Debt Clause (CRDC) now cov­ers all nat­ur­al dis­as­ters, in­clud­ing droughts, floods and health emer­gen­cies like pan­demics.

Pre­vi­ous­ly, two types of nat­ur­al dis­as­ters—trop­i­cal cy­clones and earth­quakes—were el­i­gi­ble un­der the CRDC, which al­lows el­i­gi­ble coun­tries to de­fer prin­ci­pal and/or in­ter­est re­pay­ments on IBRD and IDA loans for up to two years, the World Bank said.

“By sig­nif­i­cant­ly ex­pand­ing the scope to cov­er all cat­a­stro­phes, we are help­ing vul­ner­a­ble coun­tries to ac­cess more mean­ing­ful sup­port quick­ly. In times of cri­sis, lead­ers need a re­li­able part­ner that has their back,” said World Bank Group Pres­i­dent Ajay Ban­ga, who made the an­nounce­ment dur­ing COP29 in Baku. “The World Bank wants to be that part­ner.”

So far, the World Bank said 14 coun­tries (out of 45 that are el­i­gi­ble for CRD­Cs) have in­clud­ed this clause in their loan agree­ments.

The World Bank said one coun­try—St. Vin­cent and the Grenadines—ex­er­cised the de­fer­ral op­tion af­ter Hur­ri­cane Beryl.

“There is no cost to bor­row­ers, and any fees as­so­ci­at­ed with of­fer­ing the CRDC are re­cov­ered from con­ces­sion­al re­sources,” the Bank said. “Aside from mak­ing the clause more rel­e­vant for coun­tries that face a mul­ti­tude of nat­ur­al haz­ards, we have al­so sim­pli­fied the process for clients to ap­ply to de­lay re­pay­ments in the event of a cat­a­stro­phe.”

The CRDC is part of a broad­er suite of tools in its Cri­sis Pre­pared­ness Re­sponse Toolk­it avail­able to coun­tries cop­ing with the dev­as­ta­tion wrought by nat­ur­al dis­as­ters.

This toolk­it al­so in­cludes mea­sures to redi­rect fi­nanc­ing for emer­gency op­er­a­tions, the World Bank said. —BAKU, Azer­bai­jan (CMC)