Nepal Explores Catastrophe Bond After Devastating Floods

KATHMANDU, Oct 15 (NNN-Xinhua) -- Nepal and the International Bank for Reconstruction and Development (IBRD), the World Bank Group’s lending arm, have signed an agreement to explore a catastrophe bond that would provide the country with rapid access to funds in the event of a major earthquake, the global development financier said on Thursday, reported Xinhua.

“The agreement marks the beginning of a collaboration to assess how capital markets can support Nepal’s broader disaster risk management strategy,” the World Bank said in a statement.

The initiative is part of the World Bank Group’s established catastrophe bond programme, which helps countries access international capital markets to transfer disaster risk and secure financial protection against natural hazards.

Payouts are triggered by objective physical parameters, such as an earthquake’s magnitude or a storm’s wind speed within a designated geographical grid, rather than lengthy post-disaster damage assessments. This allows funds to be made available quickly for emergency relief.

As one of the world’s most disaster-prone countries, Nepal is working to strengthen its ability to prepare for, withstand and recover from future natural disasters through a combination of risk reduction, preparedness and financial protection measures.

The agreement was signed following devastating mudslides and floods on Aug 26 that have claimed nearly 1,500 lives, while more than 5,000 people remain unaccounted for.

The disaster also swept away communities, homes, hydropower facilities, bridges, roads and other infrastructure.

Physical damage was estimated at US$1.66 billion, according to the World Bank’s Global Rapid Post-Disaster Damage Estimation report.

--NNN-XINHUA