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The World Bank approved on Wednesday a US$ 275 million Disaster Risk Management Development Policy Loan for Morocco that contains a Deferred Drawdown Option for Catastrophe Risks (Cat DDO).
The loan is designed to both help the country strengthen its capacity to manage the financial impact of natural disasters and climate-related shocks, and to upgrade its institutional framework for disaster risk management, the World Bank pointed out in a press release.
«The Cat DDO aims to help Morocco develop a comprehensive framework for disaster risk management, building on a previous World Bank-supported program, the Integrated Disaster Risk Management and Resilience Program for Results», said Jesko Hentschel, World Bank Maghreb Country Director.
The Cat DDO will support reforms designed to strengthen the financial, governance, and operational framework of the Solidarity Fund against Catastrophic Events (FSEC).
After a natural disaster, it would give the government immediate access to liquidity, adding a critical layer to Morocco’s risk management policies.
Besides, the program seeks to upgrade the country’s institutional framework for disaster risk management as well, by strengthening the National Civil Protection system and creating a National Flood Risk Management Information System.
«The program will help the government’s understanding of the financial risks associated with natural disaster and also improve its knowledge of how to prevent these risks through better investment planning and more investment in risk reduction, preparedness, and financial protection», said Augustin Maria, Senior Urban Development Specialist and co-Task team leader.
Under the CAT DDO loan conditions, the line of credit will be available for disbursement at any time within a period of three years, which can be extended up to four times for a total period of fifteen years. A one time front-end fee of 0.5% of the loan amount is to be paid upon signature of the loan agreement, while a 0.25% renewal fee is charged for each possible extension during the fifteen-year timeframe.
