IDB Loans Honduras US$100 Million for Disaster Risk Management

Hurricanes Fifi of 1974 and Hurricane Mitch in 1998 stand out as the most severe events in recent decades, with 23 percent and 38 percent of the population affected and material damages equivalent to 52 percent and 72 percent of gross domestic product, respectively.

Inter-American Development Bank
Honduras will better cope with extraordinary expenses in case of natural disasters with assistance from an Inter-American Development Bank (IDB) standby loan for US$100 million. The United Nations (UN) has identified Honduras as the most hurricane-vulnerable country in the world. In the last 30 years, the country has been battered by 12 of them, with an average of 1,300 deaths per event and a total of US$4 billion in losses. "The IDB's assistance will allow the country to reduce the financial cost of emergency expenses and mitigate the impact such disasters may have on the economy by increasing the availability, stability and efficiency of financing," said Guillermo Collich, IDB team leader for the operation.

Hurricanes Fifi of 1974 and Hurricane Mitch in 1998 stand out as the most severe events in recent decades, with 23 percent and 38 percent of the population affected and material damages equivalent to 52 percent and 72 percent of gross domestic product, respectively.

The IDB funds will be allocated to cover extraordinary public expenses related to natural events of great magnitude, to cover disbursements associated with emergency sanitary elements, vaccines, medications, facilities and equipment for temporary shelters and food for affected populations, among other items. They will will also strengthen the Comprehensive Natural Disaster Risk Management Program, a government plan intended to promote effective comprehensive natural disaster risk management through activities grouped into the following areas: governance and development of guiding framework; risk identification; risk reduction; disaster management, and financial risk management.

The financial assistance to be provided by the bank through this operation includes one loan for US$70 million and 30 years with a grace period of 5-1/2 years, and another for US$30 million from the IDB's Fund for Special Operations, concessional in nature, for 40 years, with a 40-year grace period, as well, and at a reduced rate of 0.25 percent. (12/1/11)