Belize has secured a US$20 million Development Policy Credit with a Catastrophe Deferred Drawdown Option (Cat-DDO) from the World Bank Group. The decision, approved by the World Bank’s Board of Executive Directors, aims to provide emergency funding in case of natural disasters and support policy reforms that strengthen Belize’s climate and disaster resilience.
Belize is considered highly vulnerable to climate-related risks, ranking third among small island developing states for disaster risk and fifth for climate change risk. The country faces frequent hurricanes, floods, and coastal erosion. Nearly 60 percent of its population lives near the coast, with over a third residing in low-lying areas.
In recent years, Belize has experienced several severe weather events 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.
Economic losses due to these events are significant. Average annual damages are estimated at US$27 million, while a major disaster could result in damages exceeding US$670 million—almost a quarter of Belize’s GDP.
To address these challenges, the Government of Belize is implementing reforms supported by the Cat-DDO. The first set of measures includes introducing its first National Disaster Preparedness and Response Plan, adopting a National Land Use Policy for sustainable development guidance, and establishing regulations for a National Building Code that incorporates climate risk considerations.
A second group of reforms aims to enhance financial protection against disasters. These include adopting a comprehensive Disaster Risk Financing Policy and Implementation Plan, publishing an annual Fiscal Strategy Plan with a Medium-Term Fiscal Framework, and issuing microinsurance regulations designed to extend affordable coverage to vulnerable households and small businesses. Technical support for developing the Disaster Risk Financing Policy came from the InterAmerican Development Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR).
With these policies now implemented, Belize can access up to US$20 million through the Cat-DDO facility if faced with a natural disaster or health emergency. This financing offers immediate liquidity without diverting resources from long-term development objectives.
“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.”
Belize joins other Caribbean nations such as Barbados, Saint Vincent and the Grenadines, Grenada, Dominica, and Saint Lucia in using Cat-DDOs as part of their disaster risk management strategies.
The Cat-DDO arrangement is valid for three years with an option for one renewal period of another three years. Funding comes via the International Development Association (IDA), which provides grants and low-interest loans to support countries’ investments in sustainable development projects around the world.
Further information about World Bank activities in Latin America and the Caribbean can be found at https://www.worldbank.org/en/country/caribbean.