IDB supports CentAm disaster fund with US$1.6bn

The Inter-American Development Bank (IDB) will provide up to US$1.6bn to support post-hurricane reconstruction in Nicaragua, Honduras and Guatemala.

Hurricanes Eta and Iota struck in November 2020, inflicting 250 casualties and economic losses estimated at US$8bn.

In Nicaragua power supply was affected and nearly 44,000 houses damaged. Severe flooding occurred in Honduras, and in Guatemala a landslide buried around 150 homes in one village. 

IDB president Mauricio Claver-Carone (pictured) said in a press release, “hurricanes Eta and Iota highlighted the urgent need to have resilient infrastructure, climate change mitigation and risk management in Central America to reduce the impact on people who have been affected.”

Funds can be used to finance resilient infrastructure, disaster risk management, and basic services for vulnerable communities. 

The IDB will prepare a natural disaster prevention and response plan together with the World Bank, the Central American Bank for Economic Integration (Cabei), the Economic Commission for Latin America and the Caribbean (Eclac), among others, which will also include new financial facilities.

In December the IDB postponed loan payments and launched a pilot focused on catastrophe bonds which offer countries flexible coverage against natural disasters.

According to the World Risk Report, Guatemala is most exposed in the region to natural disasters and least prepared in terms of exposure, infrastructure, governance and ability to adapt. National disaster agency Conred identified 10,300 risk points and found 500,000 residents around Guatemala City at risk of having to deal with consequences of a catastrophic earthquake.

Cabei recently revealed its reconstruction efforts in Nicaragua, Honduras and Guatemala amount to almost US$4bn. Talks on building dams in Honduras are due to take place this week.