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The International Financial Institutions The International Financial Institutions (IFIs) provide loans for development and provide financial cooperation throughout the world. These institutions are made up of member states, arranged on a global or regional basis, which work together to provide financial services to national governments through direct loans or projects. In the aftermath of disasters, it is common for nations with low capital reserve to request increased or additional emergency loans to fund the expensive task of reconstruction and rehabilitation. Without these IFIs, most developing nations would have no means with which to recover. The largest of these, The World Bank, and one of its subsidiaries, the International Monetary Fund, will be detailed below. Other regional IFIs with similar functions include the Inter-American Development Bank (IDB) that works primarily in Central and South America, and the Asian Development Bank (ADB), based in Manila, Philippines, which works throughout the Asian continent.

The World Bank Once a disaster occurs, the World Bank (the Bank) may be called upon for help. As it is not a relief agency, The Bank will not take on any role in the initial response. However, immediately upon agreeing to participate, it begins work on restoring damaged and destroyed infrastructure and restarting production capabilities. First, a team may be provided to assist in performing initial impact assessments, including an estimate of pure financial losses resulting from the disaster and an estimated cost of reconstruction including raised mitigation standards. Second, they could restructure the country’s existing loan portfolio with the Bank in order to allow for expanded recovery projects. Thirdly, projects that have not yet been approved (but are in the application process) can be redesigned to account for changes caused by the disaster. And lastly, an Emergency Recovery Loan (ERL) can be granted, which would specifically address the issues of recovery and reconstruction.

The International Monetary Fund In the event of an international disaster or complex humanitarian emergency in a member country, the International Monetary Fund (IMF) utilizes its ‘Emergency Assistance Specific Facility’ to provide rapid financial assistance. In these situations, it is not uncommon for a country to have severely exhausted their monetary reserves. The IMF goals are to rebuild government capacity and to return stability to the local economy. In the event of a natural disaster, funding is directed towards local recovery efforts and for any economic adjustment that may be needed.