Honduras Second Disaster Risk Management Development Policy Credit with a Catastrophe Deferred Drawdown Option (Cat DDO)

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The development objective of the Second Disaster Risk Management (DRM) Development Policy Credit in Honduras is to consolidate and expand Honduras' institutional, regulatory, policy and financial framework to manage disaster and climate-related risks, including disease outbreaks. This operation is the second of its kind in Honduras. It is designed to further support the substantive efforts of the Government of Honduras (GoH) to manage the country’s exposure and vulnerabilities to adverse natural and health events, following the compound crises of the COVID-19 emergency and the Tropical Storms Eta and Iota, and to provide quickly mobilized financing in the aftermath of future emergencies. This second Catastrophe Deferred Drawdown Option (Cat DDO) supports reforms to the the National Disaster Risk Management System in its entirety and consolidates the role and mandate of Ministry of Finance and the Disaster Risk Management Ministry to efficiently manage disaster risks, while creating and substantiating the mandate of other critical institutional actors to mainstream resilience within their sectors of responsibility. It includes the following institutional and regulatory reforms (Pillar 1) and mainstreaming Disaster Risk Management and climate resilience through policy and planning in priority sectors (Pillar 2). Consistent with the first Cat DDO, this supports sustainable fiscal risk management by securing access to immediate and affordable financing in case of an adverse natural event. Following the full disbursement of the first CAT DDO in 2020 during the COVID-19 emergency, a second Cat DDO provides fresh access to fast disbursing resources as bridge financing for urgent response needs in the future. Moreover, specifically on health emergencies and epidemics, this Cat DDO builds on the GoH’s efforts to improve pandemic emergency response efforts under the first Cat DDO.