WASHINGTON DC, July 19, 2024 - The World Bank's Board of Executive Directors has approved new support to strengthen fiscal management and enhance disaster and climate resilience in the Republic of the Marshall Islands (RMI).
RMI faces substantial long-term uncertainty due to climate change, population decline, and a limited private sector, and critical reforms are needed to ensure long-term economic sustainability. With US$21 million in grants, the Enhancing Fiscal Management and Building Disaster and Climate Resilience Development Policy Operation (DPO) aims to support these reforms and contribute to the country's sustainable and resilient development.
"This is the first operation of its type in the Republic of the Marshall Islands and it comes at a critical time to support the country's resilience and sustainable development," said World Bank Resident Representative for the North Pacific Omar Lyasse. "It complements other World Bank-financed projects in the Marshall Islands on fiscal management, urban resilience, and climate adaptation, and supports a robust policy framework to meet the country's national development goals and international commitments."
A low-lying atoll nation, RMI is one of the world's most climate-vulnerable countries, facing threats that exacerbate disaster risks and undermine poverty reduction and economic growth. This operation will support policy actions to manage the impacts of climate change and natural hazards while providing access to prompt financing for catastrophic events.
The operation includes a US$9 million development policy grant and a US$12 million Catastrophe Deferred Drawdown Option (Cat DDO) development policy grant, which will be available for post-disaster efforts if an eligible catastrophic event occurs. This ensures that the country can quickly mobilize financing in response to emergencies such as typhoons, floods, droughts, and other climate-related hazards, as well as health-related emergencies.
The operation also aims to establish robust financial management and procurement processes to improve spending efficiency and enhance governance and administration in the country. The operation will support critical reforms for the country, including adapting to sea level rise, implementing a modernized Disaster Risk Management Act- updated for the first time in over 35 years-and enacting new legislation to regulate the country's first national building code. These reforms will enhance RMI's resilience to natural and climate-related hazards and guide the design of future development initiatives in the country.
The operation aligns with the Republic of the Marshall Islands National Strategic Plan 2020-30, emphasizing government accountability and efficient resource allocation. It also supports RMI's Paris Agreement climate commitments through policy actions aligned with the implementation of RMI's Climate Change Policy 2050, its Nationally Determined Contributions, and its National Adaptation Plan.
