Guatemala DRM Development Policy Loan with CAT DDO II

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The Second Disaster Risk Management Development Policy Loan operation is a stand-alone US dollar 200 million Disaster Risk Management Development Policy Loan (DPL) with a Catastrophe Deferred Drawdown Option (CAT DDO). It supports the efforts of the Government of Guatemala (GoG) to strengthen the legal and institutional framework for disaster risk management (DRM) and climate change adaptation (CCA), and to quickly mobilize resources in the aftermath of disasters in the country. This operation would be the second CA DDO in the country, it builds on the success and lessons learned from the first DPL with CAT-DDO disbursed in 2010. Guatemala is among the countries most affected by climate events and geophysical hazards. Located on the Ring of Fire between the Atlantic and Pacific Oceans, the country is frequently affected by earthquakes, landslides, and volcanic eruptions. Guatemala ranks Eleventh in the world among the countries most affected by climate-related events such as floods, hurricanes, and extreme weather. Recurrent droughts related to El Niño in the Dry Corridor endanger crops, livestock, and food security. Rapid urbanization and climate change further increase disaster risk in the country. As a result, vulnerable households may only be one disaster away from falling below the poverty line or sliding further back into poverty. Recognizing the need to enhance the country's policy and institutional framework in the areas of DRM and CCA, the GoG requested the proposed operation. The operation will support the modernization of Guatemala’s legal and institutional framework to manage disasters and climate risks; and increase the Government’s capacity to quickly mobilize resources in the aftermath of natural disasters. The operation reflects lessons learned from Guatemala’s active participation in regional disaster risk management initiatives, the use of the first CAT DDO, and the experience with the most recent disaster, the El Fuego volcano eruption (2018), for which, in the absence of any other financial instrument, Congress fast tracked the approval of the World Bank-financed First Programmatic Improved Governance of Public Resources and Nutrition Development Policy Financing (US dollar 250 million) to address the liquidity shortage. The operation can also be activated to provide timely liquidity in the case of health-related emergencies.

FY17 - Public Administration

World Bank Group

Project

Water Supply and Storage, Raw Materials, Government, Education