A. M. The Inter-American Development Bank (IDB) and IDB Invest have announced a significant expansion of their financial instruments to strengthen natural disaster risk management in Latin America and the Caribbean. The initiative includes a $2 billion increase in risk coverage, as well as new programs for both governments and the private sector.
As part of this expansion, the IDB will increase its Contingent Credit Line for Natural Disasters by $1 billion, bringing total coverage to $5 billion by 2026. This is in addition to an expansion of the IDB’s Climate Resilience Debt Covenants, which allow debt payments to be temporarily suspended after a disaster, adding another $1 billion to reach $4.2 billion in protection.
The agency also launched a Regional Disaster Risk Transfer Program, which will provide vulnerable countries such as Belize, Honduras, and Panama with access to reinsurance and capital markets to cover events such as hurricanes, earthquakes, and fires. Spain and France have already expressed interest in supporting this initiative.
At the private sector level, IDB Invest will implement a new Business Resilience Program that introduces flexible debt covenants. These allow for deferring principal payments and extending financing terms in the event of shocks such as pandemics, disasters, or social crises, thus encouraging investment in strategic sectors such as energy, infrastructure, and tourism.
IDB President Ilan Goldfajn said that these tools “accelerate recovery and ensure that financing is available when it is most needed. The expansion is part of the regional program “Prepared and Resilient in the Americas”, launched in march of this year.
With these actions, the IDB seeks not only to mitigate the immediate impacts of disasters, but also to strengthen the structural resilience of countries and companies in the region, setting a new standard in financing for sustainable development.
