In a major announcement during COP29 in Baku, the World Bank Group unveiled an expansion of its Climate Resilient Debt Clause (CRDC), offering critical financial relief to small, vulnerable nations hit by natural disasters. This initiative allows countries to defer loan and interest repayments for up to two years, enabling them to prioritize recovery efforts over debt payments.

Previously limited to tropical cyclones and earthquakes, the CRDC now includes all types of disasters, such as droughts, floods, and health emergencies like pandemics. This expansion reflects the World Bank’s commitment to providing comprehensive support to disaster-affected nations.

No Added Costs for Borrowers

The CRDC is offered at no additional cost to borrowing countries. Any fees associated with implementing the clause are absorbed through concessional resources. So far, 14 out of 45 eligible countries have incorporated the CRDC into their loan agreements, with St. Vincent and the Grenadines already utilizing it after Hurricane Beryl.

The application process for deferring repayments has been streamlined to ensure timely assistance for countries facing catastrophic events. This update aligns with feedback from vulnerable nations seeking more accessible and inclusive support mechanisms.

The CRDC forms part of the World Bank’s broader Crisis Preparedness Response Toolkit, which includes measures for redirecting emergency financing. This suite of tools underscores the organization’s role as a dependable partner in global disaster recovery efforts.