The Bank s Emergency Policy

Transcription

1 The Bank s Emergency Policy 04/10/ Emergency Recovery Assistance OP 8.50 Bank emergency assistance may take the form of (a) immediate support in assessing the emergency's impact and developing a recovery strategy; (b) restructuring of the Bank's existing portfolio for the country, to support recovery activities; (c) redesign of projects not yet approved, to include recovery activities; (d) an emergency recovery loan (ERL); and (e) mitigation investment loans. 04/10/ Emergency Recovery Loans (ERLs) ERL takes into account CAS and sectoral development strategies. Country lending program may be adjusted to accommodate new ERL (normally within the country's general lending allocation). Frequency and urgency: For recurring events, such as annual flooding, a regular investment loan is more appropriate. For a slow-onset disaster such as a drought, the more thorough preparation of a regular investment project may be preferable. ERL is expected to be fully implemented in 2-3 yrs. 04/10/

2 ERLs promote: Emergency Recovery Loans use of improved reconstruction standards, and emergencypreparedness studies and technical assistance on prevention and mitigation measures, to strengthen the country's resilience to natural hazards. ERLs do not address long-term economic, sectoral, or institutional problems, and include conditionality linked to macro-economic policies. They should include only conditions directly related to the emergency recovery activities and to preparedness/ mitigation. 04/10/ Limitations under existing OP Narrow definition of ERL and its objectives 2. Inadequate treatment of implementation issues 3. Non-coverage of contingent emergency support 4. Non-coverage of trust funds 04/10/ Are ERLs working? Percent Outcome satisfactory Sustainability likely ID Impact substantial ND Portfolio ERLs Disaster Only-non ERLs One Disaster Component Bank-Wide 04/10/

3 What is working under ERLs? Expedited procedures for processing emergency assistance from project initiation through Board approval Quick disbursements through positive list Phased engagement by deferring safeguards and some fiduciary work until later stages The ad-hoc committee Are the above actually working? 04/10/ ERLs: Current Objectives and Key Missing Objectives Current: Restoring assets and production levels in the disrupted economy Helping rebuild physical assets and social activities after emergencies Missing: Preservation of human, institutional and/or social capital (insufficient focus on importance of addressing social/institutional issues as part of comprehensive emergency assistance) Preservation or restoration of essential services Emphasis on prevention and/or impact mitigation of impending emergencies Acknowledgement of important role of trust funds 04/10/ Definition of emergency Under current OP 8.50 Borrower can request emergency assistance when it is struck by an emergency that seriously dislocates its economy, and calls for a quick response from the government and the Bank Bank can render emergency assistance in response to an extraordinary event of limited duration, such as war, civil disturbance, or natural disaster (e.g., cyclones, droughts, earthquakes etc.) 04/10/

4 Definition of emergency Issue: Uncertainty about Bank s ability to respond to many situations: Avian flu, SARs, terrorist attacks with global impact, political upheavals, economic crises; imminent emergencies (e.g., crack in a dam); contingent support for Borrowers afflicted with periodically occurring emergencies One proposed solution: looking at consequences rather than defining an event. This would enable the Bank to provide emergency assistance in response to an event that has caused, or is likely imminently to cause, a rapid and major adverse economic and/or social impact. 04/10/ ERLs: Implementation Issues/Proposed Issue: Lack of funds for essential start up activities One proposed solution: Expand Project Preparation Facility to $5 million and permit Bank-execution where requested by government and otherwise appropriate 04/10/ ERLs: Implementation Issues/Proposed Issue: Difficulty in proceeding with safeguardneutral project components until all arrangements for safeguard-sensitive components are in place. One proposed solution: Clarify the ability to defer EA to implementation stage. 04/10/

5 Environmental Assessment (OP 4.01): Emergency Recovery Projects OP 4.01 normally applies to emergency recovery projects processed under OP 8.50, Emergency Recovery Assistance....when compliance with any requirement of OP 4.01 would prevent effective and timely achievement of objectives of an emergency recovery project, the Bank may exempt the project from such a requirement. justification for any such exemption is recorded in the loan documents. 04/10/ Environmental Assessment (OP 4.01): Emergency Recovery Projects In all cases, however, Bank requires at a minimum that: (a) the extent to which the emergency was precipitated or exacerbated by inappropriate environmental practices be determined as part of the preparation of such projects, and (b) any necessary corrective measures be built into either the emergency project or a future lending operation. 04/10/ EA Sourcebook Update #21 Environmental Hazard and Risk Assessment Natural disasters and global challenges, pp the Bank is also concerned with risks arising from natural disasters such as floods, typhoons and earthquakes. Environmentally unsustainable development can undermine key ecological functions and increase the frequency of natural disasters and associated risks. The challenge is to foster development that protects natural systems which buffer communities (such as wetlands), while investing in cost-effective measures to control risks from natural occurrences. In the area of climate change, the impacts of sea level rise and disturbed weather patterns are of concern to both human and ecological communities. 04/10/

6 ERLs: Implementation Issues/Proposed Issue: Bottlenecks in efficient project implementation One proposed solution: Extend the life of ad hoc committee through project implementation to completion 04/10/ ERLs: Implementation Issues/Proposed Issue: Reluctance to apply more flexible disbursement mechanisms in weaker environments (e.g., report-based disbursements) One proposed solution: emphasize new expenditure eligibility and simplified disbursement modalities for emergency operations and clarify flexibility already available under existing procurement, financial management and disbursement policies. 04/10/ ERLs: Implementation Issues/Proposed Issue: Historic rigidity in financing recurrent expenditures required for transitional safety net support and other recovery activities One proposed solution: Expand OP coverage (and examples its gives) to include cash payments and safety net support 04/10/

7 Restructuring Existing Loans Additional Financing Policy replaces old policy on Supplemental Financing Applies to additional loans, credits or grants considered by the Board on or after July 1, /10/ WHAT does new Additional Financing Policy Permit? It permits the Bank to provide additional financing (new money on top of original loan, credit or grant amount) for ongoing investment projects under implementation to address 3 situations: cost overrun or a financing gap (as under the supplemental financing policy ) scaling-up of successful projects, and restructuring of well-performing projects in response to changed circumstances (e.g., emergencies) 04/10/ WHEN can Bank Provide Additional Financing? When project implementation is satisfactory and on track for achieving results When the additional loan is economically justified, In situations of scaled-up or modified activities, when such activities are: consistent with project DOsand the current CAS appraised by the Bank expected to be completed within 3 years of the current closing date for the project 04/10/

8 Approval Authority, Processing and Documentation All additional loans: require Board approval on a streamlined basis (18 circulation days) are identified and prepared/appraised during project supervision are processed on the basis of streamlined documentation (a Project Paper and an amendment to legal agreements) are included in the ISR and ICR for original project 04/10/ Additional Financing: Financial Terms Financial terms set independently from original terms For IBRD borrowers this means A choice of financial product for additional loan Front-end fee Full grace period and independent amortization For IDA borrowers this means Additional credits are subject to full grace period and repayment schedule Credit/grant decision for additional financing is made based on DSA framework under IDA 14, not the terms of original IDA financing 04/10/ Contingent Financing Issue: Lack of adequate preparedness, and no readily available resources to address expected emergencies Proposed : Emphasize Bank s ability to support free-standing investment projects for prevention and mitigation in countries prone to specific types of emergencies. Assist in developing a national strategy establishing an adequate institutional and regulatory framework carrying out studies of vulnerability and risk assessment reinforcing vulnerable structures and adjusting building and zoning codes, and acquiring hazard reduction technology 04/10/

9 Contingent Financing? Hyogo Framework for Action calls on governments to invest in measures such as national and local risk assessments, early warning systems, public awareness and education, better urban planning and safe building construction codes (present through 2015) 04/10/ Role of Trust Funds 9