WB approves $125m to support flood-affected households

ISLAMABAD: The World Bank approved a US $125 million credit for the
Flood Emergency Cash Transfer Project, designed to support the
government's Citizen's Damage Compensation Program (CDCP) in providing
cash transfers to more than one million flood-affected households.
The project will also strengthen the management of the CDPC through
effective grievance redressal mechanisms and establishing control and
accountability measures to ensure efficient and transparent delivery of
the support.
"The 2010 floods were a disaster of historic proportions that affected
over 20 million people and created a massive recovery need," said Rachid
Benmessaoud, World Bank Country Director for Pakistan.     Â
Benmessaoud said that households faced with income shocks often adopt
coping strategies that are not beneficial over time, including reducing
assets and consumption, increasing borrowing, and taking children out of
school to work.
Therefore, the country director added, cash assistance to flood-affected
households is essential to mitigate the adverse effects of income shocks
besides addressing the issue of poverty and vulnerability.
Importantly, the project will also assist in developing necessary
capacities and systems to effectively handle the similar disasters in
the future.
Launched in September 2010, the CDCP provided around 1.4 million
families with cash grants of Rs20,000 to cover their immediate needs,
said WB press statement here Wednesday.
The next phase, supported by this project, will provide an additional
payment of Rs40,000 to around Rs1.1 million most affected households,
thereby reaching between 7.5 and 8.3 million people to rebuild their
lives, it said.
To meet the total financing requirements for the CDCP, the World Bank
has worked closely with other development partners, some of which (USAID
and Italy) have already committed funds.
"International evidence suggests that cash grants allow the recipients
the flexibility of choosing where to put their resources based on their
specific conditions and priorities," said Iftikhar Malik, Co-Project
Team Leader, adding "Beneficiaries are expected to use these additional
grants to not only cover basic consumption but to also recapitalize
assets as well as recover their livelihoods."
The World Bank is well placed to support the government of Pakistan in
extending and strengthening the CDCP due to its substantial
international and regional experience in protecting the affected and
vulnerable through post- disaster cash transfer programs.
In addition to this operation, the Bank has assisted the government in
its flood response through financing the Post-Disaster Needs Assessment
and making available US $300 million for fast-disbursing financing of
critical flood-related imports and US $20 million for highway
reconstruction.
The credit is from the International Development Association (IDA), the
World Bank's concessionary lending arm.
US $81 million of the credit carries a 0.75% service charge, 10 years of
grace period and a maturity of 35 years, the press statement said adding
the remaining US $44 million has the same terms plus a fixed interest
charge of 3.2%.