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(Archived 3/1/2007, replaced by OP/BP 8.00) This Operational Policy statement was revised in August 2004 to reflect the term "development policy lending" (formerly adjustment lending), in accordance with OP/BP 8.60, issued in August 2004. Note:  The policies set out in OP 8.50 apply to all projects for which the first mission begins after September 1, 1995.  OP and BP 8.50 together replace OD 8.50, Emergency Recovery Assistance, and draw on the Operational Memorandum Disclosure of Factual Technical Documents, 6/20/94.  Questions may be addressed to opmanual@worldbank.org. |
 1.  A country may request assistance from the Bank1 when it is struck by an emergency2 that seriously dislocates its economy3 and calls for a quick response from the government and the Bank.
2. The main objectives of emergency recovery assistance are to restore assets and production levels in the disrupted economy.  The Bank finances investment and productive activities, rather than relief4 or consumption, and focuses on areas of its comparative advantage.  Immediate relief activities are best carried out by local groups, the government concerned, bilateral relief programs, nongovernmental organizations (NGOs), and specialized international relief organizations.
Forms of Bank Emergency Assistance
3. Bank emergency assistance may take the form of:
(a)Â 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; and
 (d) provision of an emergency recovery loan (ERL).
ERLs
4. ERLs are designed to help rebuild physical assets and restore economic and social activities after emergencies.  ERL activities address restoration of assets and production, rather than relief.  An ERL takes into account the Country Assistance Strategy and sectoral development strategies.  The country lending program may be adjusted to accommodate a new ERL, normally within the country's general lending allocation.
Criteria
5. The Bank considers the following criteria in deciding whether to provide an ERL:
(a)Â Impact on economic priorities and investment programs.
 (b) Frequency.  For recurring events, such as annual flooding, a regular investment loan is more appropriate.
 (c) Urgency.  For a slow-onset disaster such as a drought, the more thorough preparation of a regular investment project may be preferable.  (d) Prospects for reducing hazards from similar natural disasters in the future.
 (e) Expected economic benefits.
Design Considerations
6. Normally, an ERL is fully implemented in two to three years.  Each ERL project is adapted in form and scope to the emergency's particular circumstances and retains flexibility.  ERL projects use disaster-resilient reconstruction standards.  They also include emergency-preparedness studies and technical assistance on prevention and mitigation measures, to strengthen the country's resilience to natural hazards or lessen their impact.
Conditionality
7. ERLs do not attempt to address long-term economic, sectoral, or institutional problems, and do not include conditionality linked to macro-economic policies.  They include only conditions directly related to the emergency recovery activities and to preparedness/mitigation in the event the disaster recurs.
Procurement, Disbursement, and Retroactive Financing
8. Standard Bank operational policies, including those on procurement,5 consultants,6 and disbursement,7 apply to ERLs.  ERLs may include quick-disbursing components.  However, a distinction is maintained between ERLs and development policy lending: an ERL is designed to finance only a positive list of imports identified as necessary to a well defined recovery program.  Disbursements can be made for up to 100 percent of the imports' cost.  No more than 20 percent of loan proceeds may be used for retroactive financing of expenditures, and the payments must have been made after the emergency occurred and within four months prior to the expected date of loan signing.8  In exceptional circumstances, with the approval of the managing director, operations, concerned the date of the first mission or the date of the emergency event may be used as the earliest date for expenditures eligible for retroactive financing.
Donor Coordination, Local NGOs
9. When designing quick-disbursing components under ERLs, the Bank coordinates with the IMF regarding the country's plans to use the Fund's Compensatory Financing Facility for recovery activities.  Collaboration with the United Nations Development Programme and other international agencies, local NGOs, and donors is often helpful in devising the recovery assistance strategy under an ERL and in designing specific prevention and mitigation programs.
Prevention and Mitigation Projects
10. In addition to emergency assistance, the Bank may support freestanding investment projects for prevention and mitigation in countries prone to specific types of emergencies.  Such operations could assist in (a) developing a national strategy, (b) establishing an adequate institutional and regulatory framework, (c) carrying out studies of vulnerability and risk assessment, (d) reinforcing vulnerable structures and adjusting building and zoning codes, and (e) acquiring hazard-reduction technology.
____________ "Bank" includes IBRD and IDA, and "loans" includes IDA credits and IDA grants. For the purposes of this statement, an emergency is an extraordinary event of limited duration, such as a war, civil disturbance, or natural disaster.  Examples of natural disasters include cyclones, droughts, earthquakes, floods, forest fires, and tidal waves. Serious economic dislocation caused by external economic shocks or other situations justifying development policy lending is not considered an emergency. Examples of relief activities include search/rescue, evacuation, food/water distribution, temporary sanitation and health care, temporary shelter, and restoration of access to transport. See OP/BP11.00, Procurement. See OP/BP 12.00, Disbursement. See OP 12.10, Retroactive Financing; and Amendment to the Processing of Exceptions (memo from Jan Wijnand, OPR, to senior operations advisers, 2/8/95).
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