The Board of Executive Directors of the World Bank Group has given the green light to a new project designed to assist Saint Lucia in accessing financial resources quickly during emergencies. Announced on April 10, 2025, this initiative aims to bolster the island nation’s ability to prepare for and address natural disasters and health-related crises.
The initiative, named the US$20 million Disaster Risk Management Development Policy Financing project, involves a Catastrophe Deferred Drawdown Option (Cat DDO). This serves as a rapid-access credit line to provide necessary financial support once an emergency situation is officially declared.
Saint Lucia, vulnerable to extreme weather conditions being located in the hurricane belt, faces mounting challenges from hurricanes, landslides, droughts, and floods. Estimated annual damages from hurricanes alone are close to US$9.5 million, equating to roughly 0.4 percent of the nation's GDP from 2023. Additionally, it is concerning that nearly half of Saint Lucia’s population resides within five kilometers of the coastline, heightening the risk of loss.
The Cat DDO is set to provide immediate liquidity during disasters. To unlock these funds, Saint Lucia has implemented specific policy reforms focusing on two critical areas: enhancing physical and data infrastructure for disaster management and improving fiscal readiness for future emergencies.
In enhancing physical infrastructure, the government of Saint Lucia has revised physical planning regulations aimed at promoting safer land use and ensuring infrastructure developments are risk-informed. Meanwhile, fiscal resilience is being bolstered through the newly adopted Public Asset Management regulations to evaluate public infrastructure and a Disaster Risk Financing Strategy outlining economic management tools for disaster aftermath.
World Bank Division Director for the Caribbean, Lilia Burunciuc, remarked: “The high costs of recovery and reconstruction following a natural disaster strains public finances, contributes to increased debt and limits countries’ ability to invest in development and higher living standards. This project helps Saint Lucia address these challenges by advancing key reforms and providing rapid access to financing in the event of a disaster. It also reduces the need for costly emergency borrowing and enables faster, more fiscally responsible recovery, benefiting all Saint Lucians.”
Saint Lucia becomes part of a group of Caribbean nations, such as Grenada, Jamaica, Dominica, and others, utilizing Cat DDOs to strengthen their financial and institutional infrastructure against increasing disaster risks. The project is financially backed by the International Development Association, supporting small island economies and low-income countries through grants and low-interest financing options.
Policy reform technical assistance was delivered with financial backing from several international partners such as the European Union, the Global Facility for Disaster Reduction and Recovery, and the Caribbean: Strengthening Fiscal Risk Management Trust Fund. Contributions came from a diverse group of countries and organizations, including the United Kingdom, Germany, France, and more.