Bolivia Increases its Resilience to Natural Disasters, Public Health Emergencies with IDB support

The Inter-American Development Bank (IDB) approved a $250 million contingent loan to help Bolivia boost its financial resilience against floods, droughts, forest fires, and possible epidemic and pandemic outbreaks. 

The loan, approved by the IDB's Board of Executive Directors through the Contingent Credit Facility for Natural Disaster and Public Health Emergencies (CCF), will enable Bolivia to quickly access resources in the event of natural disaster and public health emergencies to finance immediate care for the affected population, helping lay the groundwork for a rapid and sustainable recovery.

"This CCF loan is the first ex-ante financial instrument contracted by the country. It represents a significant step in reducing financial vulnerability to disasters,” said Juan José Durante, a specialist with the IDB's Connectivity, Markets and Finance Division. “The IDB is committed to continue supporting Bolivia’s efforts to strengthen its financial strategy to mitigate the impact of disasters in a context of increased natural cataclysms due to climate change." 

Bolivia is highly exposed and vulnerable to natural hazards of hydrometeorological origin. As the effects of climate change worsen, these hazards are expected to become more frequent and intense, disproportionately affecting vulnerable groups, particularly women and indigenous communities.

The country will use the funds to strengthen its capacity to deliver a quick and effective response to the impact of extreme events, including humanitarian assistance activities, reconnection of public services, and early rehabilitation of critical infrastructure, among other immediate response measures.

In addition, this operation, together with a technical assistance program, will contribute to improve the country's integrated disaster risk management in five strategic areas: governance and policy framework development, risk identification and knowledge, disaster risk reduction and adaptation, disaster preparedness and management, and risk financial management.

Until disbursements are made due to the occurrence of a large eligible event in the country, this operation does not generate external financing for Bolivia.

This operation is in line with the IDB Group's new Institutional Strategy. 

If resources from the loan are disbursed in the event of an extreme event, the financial conditions that the financing would have are a 25-year repayment term, a 5-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR).