In August 2019, just months before COVID-19 spread throughout the world, Maldives signed an agreement with the World Bank to create a Catastrophe Deferred Drawdown Option (Cat DDO) that gave the country a critical tool to help finance its response to the deadly pandemic. It was the first Cat DDO ever to explicitly include health emergencies as an integral part of a country’s disaster risk management and resilience program. It works by creating a contingent line of credit providing immediate access to finances once a state of emergency, or public health emergency, is declared. The government triggered the drawdown option in March 2020.
Maldives, an Indian Ocean archipelago of 26 atolls with a population of 407,000, announced its first case of COVID-19 on March 7, 2020, four days before the World Health Organization (WHO) designated it as a pandemic. The government declared a health emergency later that month and triggered the Cat DDO. The World Bank immediately provided resources equivalent to U$10.02 million to the government through the International Development Agency (IDA). A Pandemic Emergency Financing Facility (PEF) provided additional resources of more than US$952,000.
The National Emergency Operation Plan (NEOP) developed by the National Disaster Management Authority (NDMA) and the Health Emergency Operation Plan (HEOP) developed by the Ministry of Health (MoH) as part of the Cat DDO were critical to a coordinated multi-agency government response, where NDMA and MoH had clear roles in the pandemic response effort.
Since the disastrous 2004 Indian Ocean tsunami, the Government of Maldives (GoM) has focused on creating a coordinated, strategic, and multi-sectoral approach to disaster risk management. The country is also committed to strengthening its core capacities to prevent, detect and respond to health emergencies, under the WHO’s International Health Regulations. Through this operation, the Bank supported the strengthening of the emergency preparedness and response protocols and capacity to include health emergencies, ultimately strengthening the country’s capacity to respond to COVID-19. This is in addition to providing much-needed financial resources to address the pandemic.
The GoM was committed to putting disaster risk reduction and climate change adaptation at the heart of the planning and budgeting process. It supported strategic policy reforms under three pillars: i) enhancing the institutional and regulatory framework to manage the impact of climate and disaster risk, ii) integrating climate and disaster risk reduction in key sectors, and iii) enhancing the capacity to manage human health crisis preparedness and response. While developing the Cat DDO, the NDMA and the MoH worked to align their emergency plans and corresponding Standard Operating Procedures to improve coordination, especially in response to a national multi-sector threat such as COVID-19.
As part of the Cat DDO operation, the GoM prepared several plans and operational procedures to strengthen its capacity to respond to health emergencies. When COVID-19 emerged, NEOP and HEOP were activated to lead an effective and well-coordinated multi-agency response. With MoH as the technical lead, the NDMA played a critical role in operationalizing the emergency response by coordinating between first responders and the task force, building national capacity to put specialized COVID-19 treatment facilities in place, and conducting a needs assessment.
The HEOP simulation exercises under the Cat DDO proved to be critical to the GoM’s preparations. The government carried out four simulation exercises in 2020, including a tabletop exercise in January to test the standard operating procedures for “Points of Entry,” which helped the authorities to put in place COVID-19 detection measures at Velana International Airport. The exercise involved the HEOC members from the Health Protection Agency (HPA/MOH), airport agencies and health representatives from nearby hospitals. Other exercises included testing the Rapid Response Team’s ability to respond to a positive case of COVID-19 in the capital Malé, a multi-agency tabletop exercise organized by the Maldives National Defense Force (MNDF) and NDMA, and a full-scale simulation exercise on March 25, 2020 to test response to community spread within the Malé area.
As part of this operation, the GoM significantly expanded the meteorological observation network, from 36 to 63 Automated Weather Stations (AWS), ensuring much-improved climate data collection, management and forecasting and allowing more effective early warning and disaster preparation, especially for poor and agricultural communities.
Despite constraints posed by COVID-19, the Cat DDO also helped the GoM expand the water and sewerage network to provide people access to safe water and adequate sanitation, with almost 70% and 80% water and sewerage coverage. This increased access provided before the pandemic struck enabled the government to respond during the crisis when 47 islands requested emergency water supply.
Bank Group Contribution
The success of this pioneering operation was due to GoM commitment and a Bank team drawn from three Global Practices – Climate Change and Disaster Risk Management; Macro Economics & Fiscal Management; and Health, Nutrition and Population. The Maldives used its Concessional Core IDA Allocation to fund 50 percent of the $10.2 million Cat DDO amount and the rest was financed by IDA’s overall resources. The Cat DDO’s front fee, commitment fee and renewal fee were set at zero percent. The Cat DDO also helped pre-position grant funds for health emergencies through co-financing from the PEF that have proved successful during the COVID-19 outbreak.
The United Nations Development Programme (UNDP), United Nations Environment Program (UNEP), the World Health Organization (WHO) and the United Nations International Children’s Emergency Fund (UNICEF) are key partners in the areas supported by this operation. UNDP has provided technical assistance NDMA to build disaster-risk management capacity and develop key documents such as NEOP and NDMP. UNEP is supporting the Ministry of Environment and Energy’s Climate Change Department to develop Maldives’ National Adaption Plans (NAPs). WHO, UNICEF and other UN agencies have supported the GoM in preparing the Health Emergency Operation Plan, which provides guidance and structure to the MoH and partner institutions and stakeholders. WHO supported the GoM in establishing the Health Emergency Operation Center (HEOC) and provides continuous support to the country in meeting its International Health Regulations (IHR) core capacities.
The GoM is strongly committed to the reforms foreseen in the Cat DDO and to building a more disaster-resilient country. It plans to support and complement the following policy reforms, indicated as Prior Actions, under the relevant government authority: National Disaster Management Authority (Ministry of Defense), Building Code (Ministry of National Planning Housing and Infrastructure), Nationally Determined Contributions Implementation Plan (Ministry of Environment), National Water and Sewerage Regulations (Ministry of Environment), Health Emergency Operation Plan (Ministry of Health), and Health Emergency Operations Center (Ministry of Health).
The effective operation of the Cat DDO reflects the GoM’s serious commitment to a resilience agenda and the Bank’s long-term commitment to helping the country better manage disaster risk and become more resilient to the impacts of climate change. The experience with the Cat DDO is expected to pave the way for similar innovative projects in the region and elsewhere.
All Maldivians have benefited from the result of funding released by the Cat DDO, particularly the 42 percent of the population living within 100 meters of the shore and subject to the impact of rising waters. The number of poor in the atolls is seven times higher than in Male. The reform program, supported through the Cat DDO and PEF, is further expected to have a positive impact on poverty and social conditions as progress is made in national disaster risk management and vulnerability reduction strategies.