Kiribati First Resilient Growth Development Policy Operation with a Catastrophe Deferred Drawdown Option

The operation is the first in a programmatic series of two development policy operations (DPO), and includes a Disaster Risk Management (DRM) policy grant with a Catastrophe Deferred Drawdown Option (Cat DDO). The objectives and pillars of the operation are: (i) strengthening fiscal management, and (ii) promoting inclusive and climate-resilient economic development. The first operation provides grant financing of US$10.0 million, comprising of US$8.0 million in a development policy grant and US$2.0 million in Cat DDO on grant terms. This operation builds on the World Bank engagement with Kiribati, as laid out in the Regional Partnership Framework (RPF) FY17-FY21, which has been extended to FY23. The proposed operation seeks to build fiscal resilience for the government, financial resilience for households, and disaster and climate resilience for the i-Kiribati communities. It seeks to improve the country’s ability to absorb and recover from shocks, without endangering its development trajectory. Fiscal resilience requires enhancing fiscal transparency, revenue generation, and public expenditures management. Household resilience is supported through financial intermediation. Disaster and climate resilience is pursued through regulatory reforms that protect the environment, improve disaster response mechanism, and build climate-resilient infrastructure, which is central to this operation as natural disasters and climate change affect poor communities disproportionately, making them prone to seek social welfare and burden the fiscal position.