The World Bank and the Inter-American Development Bank (IDB) have announced a partnership that will see them working together to improve access to disaster risk financing across the Caribbean region, with catastrophe bonds one instrument in scope.
World Bank President Ajay Banga and IDB President Ilan Goldfajn signed a broad memorandum of understanding for cooperation yesterday, covering items from supporting net-zero-deforestation efforts in the Amazon, strengthening the Caribbean’s resilience to natural disasters, and bridging the digital-access gap, across Latin America and the Caribbean.
The pair are also set to work with the World Bank’s International Finance Corporation (IFC) to attract more private sector investment into the region as well, while they will also work with MIGA, the political-risk insurance arm of the World Bank, and IDB Invest, the private-sector arm of the IDB Group, to collaborate on the mitigation of political risk in the region.
“Our global challenges require a new playbook for the World Bank that will drive impactful development. That mission demands we reimagine partnerships across the board with the private sector, civil society, and other multilateral institutions. The World Bank can and must play a central role to coordinate global action, working collaboratively – not competitively – to deliver impact and meaningful change. This partnership and workplan between the World Bank and Inter-American Development Bank is that ambition in action,” explained World Bank President Ajay Banga.
“MDB reform is an opportunity to increase development impact. This partnership with the World Bank marks a pivotal milestone,” added IDB President Ilan Goldfajn. “Together, we are forging ahead with a shared vision, from sustainable bio-economies in the Amazon region to supporting Caribbean resilience and bridging digital divides reducing access gaps including in education. Our joint commitment is a testament to the power of collaborative innovation for Latin America and the Caribbean.”
The agreement is expected to drive greater support for countries in the Caribbean region to manage disasters and climate shocks, as well as to develop financial protection mechanisms that can respond when catastrophes occur.
Catastrophe bonds are in scope, reports suggest, and the IDB has already worked alongside the World Bank in delivering contingent disaster risk financing to Jamaica, so it is to be hoped the cooperation sees the pair working to broaden access to disaster insurance, supported by reinsurance and capital market investors.
By helping other Caribbean nations further develop their disaster risk financing approaches, the region can move towards greater use of private capital to support contingent disaster risk financing, in catastrophe bond as well as other forms.