Nepal and World Bank Sign $150M Deal for Rapid Disaster and Health Emergency Response

The Nepal Disaster Resilience Development Policy Credit with Cat DDO supports key reforms for disaster response, risk reduction, and infrastructure resilience.

The Government of Nepal has secured a US$150 million contingency financing agreement with the World Bank to enhance its capacity to respond swiftly to natural disasters, climate-induced hazards, and health crises. This Catastrophe Deferred Drawdown Option (Cat DDO) financing, signed on October 23 by Nepal's Ministry of Finance Secretary Ram Prasad Ghimire and World Bank Regional Country Director David Sislen, marks a significant step in Nepal’s disaster resilience strategy.

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, along with World Bank Vice President for South Asia, Martin Raiser, witnessed the signing. Secretary Ghimire emphasized that the Cat DDO will provide Nepal with “immediate and flexible liquidity,” vital for prompt response during disasters, especially as the country faces growing climate threats and fiscal pressures. This financing is part of Nepal’s broader disaster resilience plan, complementing the National Disaster Management Fund and the Prime Minister’s Disaster Relief Fund.

The Nepal Disaster Resilience Development Policy Credit with Cat DDO supports key reforms for disaster response, risk reduction, and infrastructure resilience. It also aims to strengthen Nepal’s early warning systems, regulatory frameworks, and institutional mechanisms for public health emergencies.

David Sislen, World Bank Regional Country Director for Maldives, Nepal, and Sri Lanka, praised the agreement as an innovative financing tool that prevents resources from being diverted from ongoing development programs during emergencies. "This operation provides not only financial resources but also builds institutional capacity to ensure effective response on the ground,” he stated.

Nepal’s disaster response framework benefits from technical support through the Global Facility for Disaster Risk Reduction and Recovery (GFDRR) and the Earthquake Housing Reconstruction Multi-Donor Trust Fund, which is funded by partners including the Canadian government, USAID, FCDO, and SDC. This partnership aims to strengthen Nepal’s crisis resilience as it works to mitigate the increasing impacts of climate change and natural hazards on its communities and infrastructure.

With Nepal prone to seismic, hydrological, and climate-induced risks, the Cat DDO’s contingency financing will allow rapid response to emergencies, helping protect lives and critical infrastructure while supporting the country's longer-term resilience goals.