KATHMANDU, Oct. 15 (Xinhua) -- Nepal and the International Bank for Reconstruction and Development, the lending arm of the World Bank Group, signed a mandate agreement to explore the development of a catastrophe bond to help Nepal access funds quickly in case of a major earthquake, the global development financier said on Thursday.
"The agreement marks the beginning of a collaboration to assess how capital markets can support Nepal's broader disaster risk management strategy," said the World Bank in a statement.
This initiative is part of the World Bank Group's established catastrophe bond program, which helps countries access international capital markets to transfer disaster risk and secure financial protection against natural hazards.
Payouts rely on objective physical triggers, 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 ensures rapid liquidity for emergency relief.
As one of the world's most disaster-prone countries, Nepal is working to better prepare for, withstand, and recover from future natural disasters through a combination of risk reduction, preparedness, and financial protection measures.
The two sides signed the agreement in the wake of devastating mudslides and floods on Aug. 26 that have so far claimed nearly 1,500 lives while over 5,000 are unaccounted for. The disaster also swept away communities, houses, hydropower facilities, bridges, roads and other infrastructure.
The estimated physical damage was 1.66 billion U.S. dollars, according to the World Bank's Global Rapid Post-Disaster Damage Estimation report. ■