KATHMANDU — Nepal and the World Bank Group have agreed to explore the development of an earthquake catastrophe bond that could help the Himalayan country access emergency funding quickly after a major earthquake.
Under the agreement, the World Bank Group’s Treasury will work with the Nepalese government and market participants to assess whether such a bond is feasible and how it could be structured.
Catastrophe bonds are financial instruments designed to provide funding when specified disasters occur. If the agreed conditions are met, funds can be released to help a country respond to the emergency and support recovery efforts.
Nepal is highly vulnerable to earthquakes, which can cause extensive damage to buildings, roads and essential services. Access to funding soon after a major disaster could help authorities respond more quickly and reduce delays in recovery.
The agreement does not mean that the bond has been approved or issued. The parties will first examine its feasibility, structure and financial requirements before deciding on the next steps.
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