Pakistan Parametric Flood Instrument Trigger Design and Structuring

• Country: Pakistan
• Summary: Pakistan Parametric Flood Instrument Trigger Design and Structuring
• PKT Ref No: 105433886
• Deadline: 21 Aug 2024
• Financier: World Bank (WB)
• Purchaser Ownership: Government
• Tender Value: Refer Document
• Notice Type: Tender
• Document Ref. No.: 0002010593
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• Description:
• Expression of Interest are invited for Pakistan Parametric Flood Instrument Trigger Design and Structuring Description: Under the Resilience and Accessible Microfinance (RAM) project, the World Bank aims to support Pakistan to enhance access to microcredit and support resilience of the microfinance sector and its borrowers. The project is scheduled for approval within fiscal year 2025. In the initial phase of the proposed project, a Climate Risk Fund (CRF) will be established, capitalized and operationalized to address climate risk and its associated impacts on the microfinance sector.The CRF will be established as an independent and sustainable state-owned liquidity facility for the microfinance sector, where the type and level of liquidity released will be determined by predefined and clear decision criteria which will be informed by objective and verifiable data (including parametric triggers that will be designed for an insurance backstop for the CRF). The CRF has been designed to meet multifold objectives: 1) Reverse the disintermediation away from locations and sectors which are prone to climate shocks (but where the risk is still manageable) by providing liquidity buffers in the event of a climate shock to help mitigate the risks; 2) Serve as an avenue to transfer some of the risks of climate-related disasters through international reinsurance; 3) Promote climate adaptation in agriculture through a pilot leveraging technology and liquidity; 4) Enhance the quality and availability of climate risk data for the microfinance sector, providing a valuable public good. The CRF will provide two distinct products: a Contingent Liquidity Instrument (CLI; the focus of this consultancy) and an Immediate Agricultural Liquidity Instrument. The CLI will extend contingent credit to the sector (to be passed onto borrowers in impacted geographies) following qualifying climatic shocks. The amount of liquidity available for on-lending by the CLI will depend on its initial capitalization, earnings from interest, investments, and annual microfinance provider (MFP) contributions, as well as from parametric insurance payouts. The terms and conditions of the credit to be extended by the CLI to MFPs will be layered and will vary depending on the severity of the climate-related disaster. It is expected that the available amount will depend on the MFP's portfolio size, their exposures in the flood-impacted areas, and the severity of estimated impacts of the climate-related disaster in those areas. Initially the CRF will focus on flood risk.The purpose of this assignment is to facilitate the design and structure of the CLI-s parametric flood triggers and parametric flood insurance backstop. The assignment is intended to build on existing preliminary flood risk analysis for Pakistan-s microfinance sector.
• Documents:

 Tender Notice