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Mexico

World Bank Approves $404 Million to Support Management of Natural Disasters in Mexico

News Release No: 2001/150/LAC
WASHINGTON, December 8, 2000-The World Bank yesterday approved a $404 million loan to support a wide-ranging initiative by the Government of Mexico to reduce the country's vulnerability to the impact of natural disasters, and to support rapid recovery when they occur.

"More than 8,000 Mexicans have lost their lives in natural disasters over the past 20 years, and property losses have totaled over $11 billion," said Olivier Lafourcade, the World Bank's Country Director for Mexico. "This loan will help Mexico reduce these losses-most of which are borne by the poor-when natural disaster strikes." A study by Mexico's National Center for Disaster Prevention (CENAPRED) found that 68 percent of the people affected by natural disasters in the country are poor or extremely poor.

Funds from the loan will finance emergency recovery and reconstruction projects through Mexico's Fund for Natural Disasters (FONDEN), which was established in 1996. At the same time, the loan will help improve the efficiency and effectiveness with which Mexico responds to such natural disasters, including environmental, social and cultural issues arising from them.

The loan, to be disbursed over four years starting in 2001, will also finance studies by government departments and agencies, leading to strategies and action to reduce human and economic losses due to natural disasters. These studies by the Secretariats of Communications and Transportation, Agriculture, Livestock and Rural Development, Social Development, Public Education, Health, and Environment and Natural Resources, and the National Water Commission, will lead to recommendations on land use, housing, insurance, road construction, farming practices and mapping, among others.

Finally, the loan will allow the Government of Mexico to assess the feasibility of using insurance, and new capital market instruments to manage disaster risk, in order to make funds for reconstruction available quickly and thereby facilitate rapid economic recovery. These efforts could be accompanied by policies requiring government agencies to insure public properties, and encouraging beneficiaries of support from FONDEN to obtain private insurance.

The US$404 million, IBRD fixed-spread loan has a five-year grace period with repayment due in 15 years.

For more information on the World Bank's work in the Latin America and Caribbean region, please visit: http://wbln0018.worldbank.org/external/lac/lac.nsf

Contact Person:

Christopher Neal (202) 473-7229
Cneal1@worldbank.org

Lee Morrison (202)-458-8741
Lmorrison1@worldbank.org