In 2024, Belize, a Caribbean nation facing increasing climate risks impacting its economy, gained access to concessional financing from the World Bank’s International Development Association (IDA). This new status provides Belize with approximately US$77 million to further its development agenda.
Previously reliant on funding from the International Bank for Reconstruction and Development (IBRD), Belize now benefits from IDA’s low-interest loans with extended repayment terms. The reclassification follows the World Bank's Board approval of a proposal extending the Small Island Economies Exception to eligible non-island small states, recognizing Belize’s unique vulnerabilities and needs. This eligibility opens opportunities for economic growth and resilience.
The key benefits of IDA membership for Belize include access to concessional financing for development projects, better climate resilience and disaster preparedness, bolstering economic growth and job creation, improved debt management and financial stability, and enhanced global partnerships and knowledge sharing.
One significant advantage is access to concessional financing. IDA loans offer favorable terms such as low or zero interest rates, long repayment periods up to 40 years, and grace periods where no payments are required. These terms contrast with more expensive commercial borrowing options. The funding will enable investments in critical infrastructure, health, and education without worsening fiscal outlooks.
Belize loses nearly 4% of its GDP annually due to natural disasters. IDA membership allows access to specific funding windows targeting climate resilience and disaster preparedness. Resources can be used for climate resiliency strategies like restoring ecosystems such as mangroves and coral reefs.
The Medium-Term Development Strategy aims for 5% annual economic growth and creating 50,000 jobs over five years. IDA resources will support initiatives boosting productivity in sectors like education, tourism, agriculture, and renewable energy. By supporting infrastructure projects and improving business environments, IDA financing helps create employment opportunities.
Belize has struggled with high public debt levels exacerbated by COVID-19 impacts. With IDA’s concessional financing reducing debt service burdens, fiscal balance becomes easier to manage. Improved debt sustainability allows more budget allocation towards essential services while reducing future debt crisis risks.
As an IDA member, Belize gains access not only to financing but also global expertise through knowledge sharing, policy advice, and capacity-building support offered by the World Bank. These resources enhance institutional capacities in areas like climate adaptation and public financial management.
One initial initiative under IDA is the Blue Cities project aimed at sustainable coastal area development including safe water supply improvements. Additionally planned is the Catastrophe Deferred Drawdown Option (Cat DDO) providing immediate liquidity during natural disasters or public health emergencies.
Another planned project focuses on early childhood care education services improvement alongside boosting female employment opportunities.
“Belize’s membership to the International Development Association marks a significant milestone," said Christopher Coye from Belize's Ministry of Finance. "This partnership opens up new opportunities for us to access crucial resources enabling us to strengthen our resilience."