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The World Bank Group has broadened its support for small, vulnerable nations facing the aftermath of natural disasters and health crises. The expansion of the World Bank’s Climate Resilient Debt Clause (CRDC) will now allow more countries to postpone loan repayments following catastrophic events, providing them with much-needed flexibility to focus on rebuilding and recovery efforts.

The CRDC now covers a wider range of disasters, including floods, droughts, and pandemics, in addition to the tropical cyclones and earthquakes previously eligible under the program. This means that nations struggling with the effects of multiple types of natural and health-related catastrophes will have access to more comprehensive relief. Under the CRDC, eligible countries can defer the repayment of both principal and interest on loans from the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) for up to two years.

A Lifeline for Vulnerable Countries

“We are significantly expanding the scope to ensure that vulnerable nations can access timely and meaningful support,” said World Bank Group President Ajay Banga, who made the announcement at COP29 in Baku. “In times of crisis, leaders need a reliable partner, and the World Bank wants to be that partner.”

So far, 14 countries out of 45 eligible for the CRDC have opted to include this clause in their loan agreements, with one country—St. Vincent and the Grenadines—utilizing the deferral option after Hurricane Beryl in 2018. This expansion is designed to streamline the process for countries to apply for debt relief during emergencies, ensuring that financial support reaches governments more quickly when they need it most.