The Inter-American Development Bank (IDB) has announced plans to support Latin American and Caribbean nations in issuing catastrophe bonds and swaps, as part of a broader initiative aimed at strengthening financial resilience against natural disasters.
This comes as the IDB recently launched its Ready and Resilient Americas program, a regional effort designed to improve disaster preparedness and response while expanding access to financial protection mechanisms.
A key component of the initiative will focus on helping countries secure risk-transfer solutions, including cat bonds and catastrophe swaps, both of which can bring in insurance and reinsurance capital to cover disaster-related losses.
Since September 2023, IDB has also been working with the World Bank to improve access to disaster risk financing across the Caribbean region, with catastrophe bonds one instrument in scope.
Moreover, IDB’s Ready and Resilient Americas program also includes efforts to enhance risk assessment tools, develop early-warning systems, and build a collaborative network among countries, international organisations, and the private sector.
The IDB will reportedly allocate $10 million in non-reimbursable financing between 2025 and 2030 to support the program, in addition to its existing funding and technical assistance efforts.
The initiative is backed by 37 member countries and co-sponsored by Chile, which has faced severe climate-related disasters in recent years, including wildfires, floods, and earthquakes.
IDB President Ilan Goldfajn, commented: “Building resilience against natural disasters is no longer optional; it’s a necessity. The Ready and Resilient Americas initiative aims to strengthen disaster preparedness in our region by equipping countries with better data and tools, building a regional coordinated response and closing the financing gap by supporting resilience bonds and other risk-transfer tools.”
Chilean Finance Minister Mario Marcel, said: “Following the devastating forest fires and floods that recently affected Chile and many countries in Latin America and the Caribbean, we came to the IDB with the conviction that disaster preparedness and resilience must be a priority. Today we celebrate the launch of Ready and Resilient Americas, and we are proud to participate and actively contribute to this vital initiative for the region – a program that comprehensively addresses management of natural disasters.
“We must remember that these emergencies have a preventive component, but also an action component. In Chile, we are well aware of this; in recent years, we have had to face fires, floods, and earthquakes. This is a phenomenon that is repeated in neighboring countries, so we must be able to act in a coordinated manner, with a focus on collaboration and containment.”
Latin America and the Caribbean are among the most disaster-prone areas globally, with 74 major catastrophes affecting nearly seven million people and causing an estimated $10 billion in economic damages in 2024 alone.
By supporting the issuance of cat bonds and swaps, the IDB is looking to provide governments with faster, more reliable funding in the wake of extreme weather events, ultimately strengthening resilience and economic stability.
