Catalog

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p. 23 of 53 BACK | NEXT Classification of Developing Member Countries in Bank Operations Bank Operations in Pacific Island Developing Member Countries Lending and Relending Policies (Ordinary Capital Resources) Lending and Relending Policies (Asian Development Fund) Sector Lending Program Lending Assistance to Private Enterprises Financial Intermediation Loans/Credit Lines Financing of Interest and Other Charges During Construction Financing of Indirect Foreign Exchange Cost of Projects Lending Foreign Exchange for Local Expenditures on Projects Retroactive Financing Supplementary Financing of Cost Overruns of Bank-Financed Projects Use of Surplus Loan Funds Foreign Exchange Risk in Bank Operations Sector Development Programs Technical Assistance Guarantee and Security Arrangment for Bank Loans Environmental Considerations in Bank Operations Gender and Development in Bank Operations Project Performance Management System The Bank's Cooperation with NGOs Emergency Rehabilitation Assistance Loan for Small DMCs Rehabilitation Assistance After Disasters Cooperation Arrangements with International Organizations and Bilateral Sources Coordination with Aid Agencies Regional Cooperation Cofinancing Japan Special Fund Guarantee Operations Bank's Operational Missions Communication with Members of the Board of Directors Processing of Loan Proposals Project Financial Management Systems, Financial Analysis and Financial Performance Indicators Economic Analysis of Projects Procurement of Goods and Works Use of Consulting Services Formulation and Implementation of Loan Convenants Effectiveness of the Loan Agreement Loan Disbursement and Loan Closing Project Accounting, Financial Reporting, and Auditing Post Evaluation Country Planning and Programming Incorporation of Social Dimensions in Bank Operations Poverty Reduction ADB Accountability Mechanism Involuntary Resettlement Internal Audit Confidentiality and Disclosure of Information Indigenous Peoples Governance Anticorruption Enhancing the Asian Development Bank's Role in Combating Money Laundering and the Financing of Terrorism

Operations Manual

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OM Section 24: Issued on 8 June 1998
Emergency Rehabilitation Assistance Loan for Small DMCs

Bank Policies (BP)

Introduction

1. The Bank has a special facility¹ to assist small island developing member countries (DMCs)² in speedily restoring vital economic infrastructure and social services following damage caused by natural disasters. The emphasis is on financing urgent rehabilitation requirements, primarily to reestablish the status quo ante, leaving any more substantial expansion and modernization needs to be addressed in a potential future loan proposal.

Scope

2. In eligible DMCs, the proceeds of the loan are applicable to financing the repair of damage caused by natural disasters in the following sectors:

(i) water, sewerage, and power infrastructure and equipment;

(ii) transportation infrastructure (roads, bridges, ports, airports, and related maintenance equipment);

(iii) communication infrastructure and equipment;

(iv) health facilities and equipment;

(v) education infrastructure and equipment; and

(vi) basic production and storage facilities in agriculture, fisheries, and manufacturing.

Financing Criteria

3. The financing will take into account the following requirements:

(i) The activities financed should relate to refurbishing of damaged infrastructure and its restoration to meet as far as possible the level of demand prior to the disaster.

(ii) The restoration work should be of a simple nature, requiring easily available standard inputs (e.g., basic equipment, glass, galvanized iron sheets, cement, steel, pipes, cable, and labor).

(iii) The execution of the rehabilitation program should not involve detailed new design and technical work or require extensive technical assistance.

(iv) The cost of the rehabilitation program financed by the Bank should not exceed $2,000,000³ per disaster.

(v) Priority should be given to alleviating damage sustained by Bank-financed projects.

(vi) The rehabilitation program should be completed within 12 months.

Source and Terms

4. Emergency rehabilitation loans may be made from the Bank's ordinary capital resources (OCR) or Asian Development Fund (ADF) resources, depending on the borrowing country's eligibility for and access to ADF at the time of loan negotiations. In the case of OCR loans, a grace period of 8 years, maturity of 30 years, and the relevant pool-based variable lending rate and standard commitment charge⁴ will apply. Standard ADF terms will apply to such loans to member countries with access to ADF, according to their eligibility for ADF or for a blend of ADF and OCR.

Size of Loans and Period of Utilization

5. The rehabilitation assistance scheme is limited to $2,000,000 for each disaster. The period of utilization is normally 12 months after the disaster has occurred.

Operational Procedures (OP)

Loan Processing and Documentation

1. Processing of disaster rehabilitation loans is characterized by simplifying and shortening normal loan processing procedures and documentation¹ as much as possible, in order to identify quickly the affected country's most pressing needs and to provide financial assistance promptly, so that the country can begin and complete its rehabilitation efforts in the quickest possible way.

2. Once a disaster strikes, the Bank may field a small mission at short notice to assess the damage and advise the authorities on the approach to rehabilitation efforts. This mission will be led by staff of the Office of Pacific Operations or the Programs Division concerned, and will comprise staff from other departments and offices as appropriate. The mission will leave for the field at the request of the authorities, and no position or issues paper, preliminary project brief, or management review meeting will be required prior to the team's departure. Once in the field, the mission will clarify with the authorities the Bank's role in the rehabilitation efforts and determine if a quick-disbursing emergency rehabilitation assistance loan approach is suited to meet the DMC's requirements. The mission will be prepared to draw up the necessary project and loan documents in the field and complete the negotiation process as far as possible.

Procurement and Disbursements

3. The loan proceeds are intended to finance imports of goods and services, local purchases, and civil works. A negative list of imports will apply.² An appropriate share of the loan amount will be made available to cover local costs, as required. Given the size of the loan and its components, it is expected that no single eligible item will exceed $300,000 in value. Under the Bank's Guidelines for Procurement, such items may be procured off the shelf or through international shopping, local competitive bidding, or force account, as appropriate. The Bank's policies on advance procurement, retroactive financing, and local cost financing will be liberally applied. The precise application will be determined during appraisal. Once the loan agreement has become effective,³ the executing agency, usually the ministry of finance, will submit to the Bank a withdrawal application for up to half of the loan amount, which would be disbursed by the Bank immediately thereafter into a special imprest account to be established for the borrower with the central bank. The imprest account will be replenished in accordance with the Bank's Guidelines on Imprest Fund and Statement of Expenditures Procedures.

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