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World Bank Support to Resilience Protects Livelihoods, Safeguards Economic Gains in Romania
The World Bank’s Board of Executive Directors today (Wednesday, e.n) approved a €400 million ($493.06 million equivalent) Disaster Risk Management Development Policy Loan for Romania, which includes a Catastrophe Deferred Drawdown Option (CAT DDO), a press release sent to ACTMedia informs.
This loan will help support Romania’s efforts to effectively prepare for - and respond to - natural disasters and climate change by strengthening institutions and legislation.
“Catastrophic events represent a significant financial shock to Romania that can reverse years of economic progress and disproportionately affect the poorest,” said Tatiana Proskuryakova, World Bank Country Manager for Romania and Hungary. “Building resilience to shocks is a central element of our new strategy for Romania and is at the core of achieving a more inclusive growth. We are therefore very pleased to support a program that will enhance Romania’s ability to prepare for and manage natural disasters and provide financing to ensure an immediate help to those in need should a disaster hit.”
Romania faces one of the highest risks of earthquakes among European Union countries, with thousands of lives lost and tens of thousands of buildings damaged in earthquakes over the last 200 years. Romania is also one of the most flood-prone countries in Europe, with nearly 1 million Romanians living in areas exposed to a high risk of floods.
From 1970 to 2016, 85 catastrophic events have been recorded in Romania, including 47 floods, 4 earthquakes and 2 droughts - affected almost two million people and costing more than $6 billion in losses. The effects of climate change have also substantially increased in recent decades, bringing more frequent landslides, wildfires, drought and extreme weather events. In 2006, for example, extreme floods caused economic damage equivalent to 1% of GDP.
The new, Romania CAT DDO will address these issues by helping Romania introduce a more robust national framework for disaster risk management and increase its capacity to better identify and reduce disaster and climate risks, including from a fiscal perspective. The loan will focus on supporting the government’s efforts to comply with international commitments related to disaster risk management under the Sendai Framework and enhancing Romanians’ understanding of and response to disasters. Support will also include improvements in the building code to reduce the seismic risk in existing buildings and adequately integrate disaster risks into budgetary planning processes.
The World Bank opened its office in Romania in 1991. Since then, the Bank has provided over $13.6 billion in loans, guarantees and grants in all sectors of the Romanian economy. The Bank’s current portfolio includes investment lending, analytical work, and technical assistance to support Romania’s reform priorities. In 2016, the World Bank Group and Romania celebrated 25 years of continued partnership in supporting poverty reduction and inclusive growth.