The World Bank Group’s Board of Executive Directors has approved a US$20 million Development Policy Credit with a Catastrophe Deferred Drawdown Option (Cat-DDO) for Belize. This funding mechanism offers immediate access to emergency financing in the event of a natural disaster and supports critical policy reforms aimed at enhancing the country’s climate and disaster resilience.
Belize, with a population of about 430,000, ranks among the world’s most climate-vulnerable nations. It is the third most disaster-prone among small island developing states and the fifth most at risk from climate change. The country faces increasing threats from hurricanes, flooding, and coastal erosion, with nearly 60% of the population living along the coast and over one-third in low-lying areas.
In recent years, Belize has experienced significant climate-related shocks, including Hurricane Nana in 2020, Hurricane Lisa in 2022, and a severe drought in 2019. The 2022 Climate Risk Index ranked Belize as the second most economically affected country worldwide due to extreme weather events. These disasters have resulted in substantial economic losses, with average annual damages estimated at US$27 million and the potential for a major event to cause over US$670 million in losses—equivalent to nearly 25% of the nation’s GDP.
To build resilience, the Government of Belize is implementing a wide-ranging reform agenda under the Cat-DDO framework. One component focuses on improving disaster preparedness through the adoption of a National Disaster Preparedness and Response Plan, a National Land Use Policy, and new building code regulations that account for climate risks.
The second component of the reform program strengthens financial protection. Key measures include adopting a comprehensive Disaster Risk Financing Policy and Implementation Plan, issuing annual Fiscal Strategy Plans with a Medium-Term Fiscal Framework, and introducing microinsurance regulations to expand affordable coverage for vulnerable groups and small businesses. Technical assistance for these reforms was provided by the Inter-American Development Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR).
With these reforms in place, Belize now has immediate access to US$20 million in flexible financing under the Cat-DDO. This funding can be rapidly deployed in response to natural disasters or public health emergencies, helping to safeguard long-term development efforts. Belize joins several other Caribbean nations—such as Barbados, Grenada, and Saint Lucia—in leveraging Cat-DDOs to build financial buffers and institutional capacity against rising disaster risks.
The Cat-DDO is valid for three years and may be renewed once for an additional three-year period. The financing is provided through the International Development Association (IDA), the World Bank Group’s arm dedicated to supporting low-income countries and small states with grants and low-interest funding to promote sustainable development and resilience.
