Two complementary agreements worth US$30 million were signed on Tuesday between the Maldives finance ministry and the World Bank to help strengthen public finances and minimise impacts of natural disasters.
Signed by Finance Minister Ibrahim Ameer and World Bank Country Director Dr Idah Pswarayi-Riddihough, the risk financing instruments were described as “quick disbursing sources” for the government to take emergency response measures.
“The agreements are part of integrated risk management options to improve the country’s resilience to shocks and safeguard macroeconomic sustainability,” explained Dr Pswarayi-Riddihough.
“In addition, it is for the first time that a country in South Asia has prepared a [Catastrophe Deferred Drawdown Option] that is linked with this new pandemic emergency financing. This is a kind of insurance for the future.”
According to the World Bank, the first US$20 million agreement “will focus on improving the policy framework for enhancing sustainability of public finances and strengthening the policy framework to increase budget credibility.”
The second agreement was for a US$10 million Catastrophe Deferred Drawdown Option with an associated Pandemic Emergency Financing Facility, which would “help enhance the Maldives’ financial capacity to effectively manage the human, physical and fiscal impact of climate change, natural disasters and diseases.”
As a low-lying island nation, the Maldives is vulnerable to sea-level rise and extreme climate events. The country is also exposed to public health threats with period outbreaks of dengue and influenza.