New mechanism to expedite delivery of funds
WASHINGTON, December 8, 2011 – The World Bank’s Board of Executive Directors today approved a new mechanism that will allow the world’s poorest countries to expedite access to funding following a crisis.
The Immediate Response Mechanism complements longer-term emergency response tools available to members of the International Development Association (IDA), the Bank’s fund for the poorest, offering countries financial support within weeks rather than months of an emergency. This will be achieved through the inclusion of contingent emergency response components in existing and future investment projects, at the request of the borrower.
“The Bank has been strengthening its crisis response capabilities in low-income countries. Today’s approval of the Immediate Response Mechanism will allow us to shorten our response time even more, enabling us to address the immediate needs of IDA countries within two weeks of a crisis, provided the country meets the eligibility criteria,” said Axel van Trotsenburg, World Bank Vice President for Concessional Finance and Global Partnerships.
Countries will be able to access a portion of undisbursed balances in their investment project portfolios, up to a total of US$2.2 billion.
"In implementing this program, the Bank will work closely with interested countries to improve their emergency preparedness and arrangements for disaster response. Better planning, in advance of any crisis or emergency, speeds recovery and reduces the impact on vulnerable people," said Joachim von Amsberg, Vice President of Operations Policy and Country Services.
In the case of crises, notably natural disasters and economic shocks, IDA would provide immediate financing in support of recovery efforts, such as the activation or scaling up of safety nets to mitigate the impact on vulnerable groups, repair or restoration of basic physical assets, protection of critical development spending such as on health and education, and creation of programs to jump-start economic activity.
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About the International Development Association:
The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. It is the single largest source of donor funds for basic social services in the poorest countries. IDA lends money (known as credits) on concessional terms. IDA credits have zero or very low interest charges, and repayments are stretched over 25 to 40 years, including a 5 to 10-year grace period. IDA also provides grants to countries at risk of debt distress. Since its inception, IDA credits and grants have totaled $238 billion.
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