| Abstract: | WORLD BANK RESPONSE TO THE TSUNAMI DISASTER
EXECUTIVE SUMMARY
1. The tsunami disaster in the Indian Ocean is one of the worst natural disasters in modern
times. Well over 200,000 people died and more than 1.5 million people lost their homes and
often their livelihoods. Losses are estimated to total more than US$7 billion. Private assets,
including housing and business equipment, account for the largest share of the losses. In the
largest countries, the impact on GDP is likely to be minimal, but the damage in the affected areas
is extreme. As reported below, poor people were disproportionately affected. However, the
countries that suffered the disaster have already responded decisively.
2. Country Leadership. Except for Somalia, in all cases governments have provided the
leadership in the aftermath of the disaster. They have effectively drawn on the support of United
Nations (UN) agencies and bilateral donors for short-term disaster relief. These efforts have
been successful in providing emergency food, shelter, and medical supplies to most of the
survivors and averting widespread hunger or disease. While continuing these relief efforts—
hundreds of thousands of people continue to live in temporary housing and are dependent on
food assistance—governments quickly moved to the first phases of recovery. Most have looked
to the World Bank for substantial support in this process.
3. Financial Assistance. There has been an unprecedented outpouring of support for the
affected regions. The UN has documented US$5.3 billion in commitments from public sources.
Donations from private citizens have also been unprecedented; recent estimates put private
contributions at US$1 billion to US$2 billion. (World Bank staff alone contributed more than
US$650,000 to private charities in just a few days.) Consistent with their mandates, UN
agencies took the lead in multilateral support for relief efforts. In a first phase of support, the
World Bank stands ready in the coming months to provide financing, essentially through IDA,
on the order of US$246 million for Indonesia, US$14 million for Maldives, and US$150 million
for Sri Lanka, drawing on IDA13. (Table7 provides information on this first phase of support,
along with indicative numbers for the next phase.) The level of support for India will be
determined after the outcome of the joint Government of India-World Bank-Asian Development
Bank-United Nations Development Programme needs assessment that began on February 1.
4. World Bank Response. The disaster brought out the best in World Bank staff and
demonstrated the effectiveness of decentralization. The Bank moved quickly to
(a) provide assistance on the ground in affected countries for expedited recovery planning;
(b) mobilize its financial support; and (c) help coordinate rehabilitation and recovery support,
when asked to do so by the authorities in the affected countries. As noted below, the staff in
country offices stepped in to work side-by-side with government counterparts and other partners,
notably the Asian Development Bank, in mounting damage, loss, and needs assessments. In the
case of Maldives, the Bank quickly established a country presence, which it will maintain during
the urgent recovery phase. The Bank was able to use its comparative advantage—in-house
expertise on recovery and reconstruction, knowledge of the overall economies of these countries,
sectoral knowledge from operations and analytic work, procurement and financial management
skills, and experience with donor coordination and reconstruction financing—in assisting
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countries in formulating their recovery plans. In Somalia and the Seychelles, where the Bank
does not have active programs, Regional staff were able to provide assistance to the lead support
agencies and identify financing options outside of Bank operations. Disaster mitigation will be
an element of Bank support, but other international organizations will take the lead initially.
5. Principles of World Bank Support. Three principles have guided Bank support for
tsunami recovery efforts. First, the governments of the affected countries must have the central
role and ownership of the recovery efforts. Second, communities should be involved in
assessing their needs and designing recovery programs, linked to long-term strategies for growth
and poverty reduction. It is important that reconstruction be undertaken in ways that help to
break the cycle of poverty in these communities. Third, the international community must act in
coordination, both in the relief and the recovery phases, to ensure efficient use of donor
resources, and work with the governments of affected countries to set clear goals and monitor
and evaluate progress.
6. Bank Grants. A separate proposal is under preparation that would recommend that the
World Bank on an exceptional basis provide US$27.5 million to Trust Funds for India and
Indonesia, proportional to the magnitude of the disaster in each country. Because of their blend
status, these countries are not eligible for grants under the IDA13 emergency provisions. These
grants are justified by the extraordinary magnitude of the disaster, the poverty of the affected
areas, and the possibility of using these funds to mobilize grant funds from other donors.
7. Next Steps. As the needs assessments are completed, the World Bank will finalize work
on emergency reconstruction credits and grants for the most affected countries that have asked
for assistance: India, Indonesia, Maldives, and Sri Lanka. The Bank will continue to support
partners in providing assistance to Seychelles and Somalia, using relatively small scale non-
operational grant funding. Governments will update the reconstruction cost estimates as
emergency operations are prepared. These operations will come to the Board for discussion,
beginning in late February. The first operations to come are likely to be those involving
restructuring of existing projects. The discussions of these operations will provide an
opportunity for Executive Directors to review reconstruction estimates and plans, their
implementation, and the scale of World Bank support. We expect to report back to the Board on
the overall reconstruction efforts in about three months. Beyond the immediate relief efforts, it
is clear that a concerted World Bank Group-wide effort, also involving IFC and MIGA, will be
necessary to meet the broader reconstruction needs of the affected countries. |
