WASHINGTON, CMC- The World Bank has approved a US$20 million Development Policy Credit with a Catastrophe Deferred Drawdown Option (Cat-DDO) for Belize, providing emergency funding in the event of a natural disaster and supporting a targeted reform agenda to strengthen the country’s climate and disaster resilience.
“This project gives Belize the tools it needs to respond swiftly to emergencies while staying on course with its long-term development plans,” said Lilia Burunciuc, World Bank Director for the Caribbean.
“By strengthening disaster preparedness and financial resilience, Belize is taking important steps to protect its people and economy from the growing impacts of climate change,” she added.
The Washington-based financial institution said that Belize, with a population of approximately 430,000, is among the world’s most vulnerable countries to climate and disaster risks.
It is ranked third among small island developing states for disaster risk and fifth for climate change risk. Belize is increasingly exposed to hurricanes, floods, and coastal erosion. Nearly 60 per cent of the population lives near the coast, and over a third reside in low-lying areas, making them especially vulnerable.
In recent years, Belize has endured multiple shocks, including Hurricane Nana in 2020, Hurricane Lisa in 2022, and a prolonged drought in 2019.
According to the 2022 Climate Risk Index, Belize was ranked as the second most affected country globally in terms of relative economic losses from extreme weather events.
The World Bank said that these climate shocks have taken a heavy toll on the economy and that while Belize has made progress in restoring fiscal stability, the country remains highly vulnerable to natural hazards.
It said average annual losses are estimated at US$27 million, and a major disaster could result in damages exceeding US$670 million, nearly a quarter of the country’s GDP.
The World Bank said that to reduce these risks and strengthen its ability to respond, the Belize government is initiating a comprehensive reform programme supported by the Cat-DDO.
The reform programme focuses on two key areas. First, to improve disaster preparedness and climate resilience, the government will put in place its first National Disaster Preparedness and Response Plan, adopt a National Land Use Policy to guide more sustainable development, and issue regulations establishing a National Building Code that integrates climate risk considerations.
The second area will be to strengthen financial protection and improve the country’s ability to respond to shocks. The government will adopt a comprehensive Disaster Risk Financing Policy and Implementation Plan, commit to publishing an annual Fiscal Strategy Plan with a Medium-Term Fiscal Framework, and issue microinsurance regulations to help extend affordable coverage to vulnerable households and small businesses.
Technical support for the development of the Disaster Risk Financing Policy was provided with the support of the Inter-American Development Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR).
The World Bank said that as these reforms have been implemented, Belize now has access to US$20 million in immediate, flexible financing under the Cat-DDO.
It said that these funds can be quickly disbursed in the event of a natural disaster or health emergency, providing the government with critical liquidity to respond without diverting resources from long-term development priorities.
Belize joins other Caribbean countries that are using Cat-DDOs to build financial buffers and institutional capacity to handle increasing disaster risk, including Barbados, St. Vincent and the Grenadines, Grenada, Dominica, and St. Lucia.
The Cat-DDO is valid for three years and may be renewed once, for an additional three years. The project is financed through the International Development Association (IDA), the arm of the World Bank Group that supports low-income countries and small state economies. IDA’s grants and low-interest financing help countries invest in their futures, improve lives, and create safer, more prosperous communities around the world.
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