Nepal, World Bank Group partner to explore catastrophe bond for earthquake risk

BANGKOK: Nepal and the World Bank have signed a mandate agreement to explore the development of a catastrophe bond designed to provide Nepal with rapid financial access following a major earthquake.

The agreement between the Government of Nepal and the International Bank for Reconstruction and Development, IBRD, Aaa/AAA marks the start of a collaboration to assess how capital markets can support Nepal's broader disaster risk management strategy. Nepal ranks among the most disaster-prone countries globally and continues to work towards improving its ability to prepare for, withstand, and recover from future natural disasters through a combination of risk reduction, preparedness, and financial protection measures.

Under the terms of the agreement, the World Bank Group Treasury will collaborate with the Government of Nepal and financial market participants to assess the feasibility and potential structure of the transaction.

The initiative forms part of the established World Bank Group catastrophe bond programme, which assists sovereign nations in accessing international capital markets to transfer disaster risk and secure financial protection against natural hazards.