The World Bank (WB) will allow countries hit by natural disasters to suspend loan repayments. WB President Ajay Banga will unveil the measures, including suspension of repayments and the inclusion of disaster insurance in new loans, in a speech in Paris today, the Financial Times (FT) reports.
The decision is based on a campaign
The decision is a victory for the Birdgetown Initiative campaigners, led by Barbados Prime Minister Mia Mottley. Mottley has spent the last year pushing the initiative, which aims to get smaller and poorer countries on better terms in getting funding from the WB and the International Monetary Fund (IMF). She also wants billions of dollars for these countries to fight climate change. The suspension clause is important because it will ensure countries can recover from disaster, she told the FT.
New clause offer
The WB would initially offer a new clause to allow the most vulnerable borrowers to suspend repayment in the event of a natural disaster, but it also envisages extending the offer. The bank recognises that not every country will be able to afford insurance against natural disasters. It will therefore work with donors to ensure that even lower-income countries can afford the product.
French President Emmanuel Macron is holding a summit in Paris today and Friday to set out a plan to ease the debt burden on low-income countries while making more money available for climate finance.
Source Czech Press Office
