In 2024, Belize, a small Caribbean country grappling with increasing climate risks that strain its economy, gained access to concessional financing from the World Bank’s International Development Association (IDA). Now, Belize has access to around US$77 million (based on today’s exchange rate) to advance its development agenda.
Previously only a recipient of the International Bank for Reconstruction and Development (IBRD) funding, Belize now also has access to IDA’s low-interest loans with longer repayment terms.
This reclassification comes after the World Bank's Board approved a proposal to extend the Small Island Economies Exception to eligible non-island small states, acknowledging Belize’s unique vulnerabilities and development needs. Belize’s IDA eligibility opens new opportunities for the country to strengthen its economic growth, enhance resilience, and tackle long-standing development challenges.
Here are five key ways Belize stands to benefit from its new IDA status and access to the IDA Crisis Response Window:
1. Access to Concessional Financing for Development Projects
One of the most significant advantages of IDA membership is access to concessional financing. IDA loans, known as credits, come with highly favorable terms such as low or zero interest rates, long repayment periods (up to 40 years), and extended grace periods – a set time during which no loan payments are required.
These terms are a stark contrast to more expensive, commercial borrowing options. The new funding will allow Belize to invest in critical infrastructure, health, and education projects without worsening its fiscal outlook.
2. Better Climate Resilience and Disaster Preparedness
Belize loses almost 4% of its GDP to natural disasters every year, making it one of the most disaster-prone countries in the world. IDA membership will enable Belize to tap into specific funding windows that target climate resilience and disaster preparedness. With these resources, Belize can invest in climate resiliency and long-term strategies to mitigate climate risks, restore vital ecosystems like mangroves and coral reefs, and invest in critical development areas such as safe water supply and education. Given that climate change is one of the most pressing threats to Belize’s economic stability, IDA funding will provide a lifeline for future-proofing its economy.
3. Bolstering Economic Growth and Job Creation
Belize’s Medium-Term Development Strategy sets ambitious goals, including achieving 5% annual economic growth and creating 50,000 jobs over the next five years. IDA resources will play a pivotal role in financing initiatives aimed at boosting economic productivity, particularly in key sectors like education, tourism, agriculture, and renewable energy. By supporting large-scale infrastructure projects, fostering private sector development, and improving the business environment, IDA’s concessional financing will help Belize create new employment opportunities and lift thousands out of poverty.
4. Better Debt Management and Financial Stability
Belize has struggled with high levels of public debt, which has been exacerbated by the economic fallout from the COVID-19 pandemic and the high costs associated with borrowing from international markets. With IDA’s concessional financing, Belize will face lower debt service burdens, making it easier to manage its fiscal balance. This improved debt sustainability will allow the country to invest more of its budget in essential services like healthcare, education, and social protection programs, all while reducing the risk of future debt crises.
5. Enhanced Global Partnerships and Knowledge Sharing
As a member of IDA, Belize gains access not only to concessional financing but also to the global expertise and technical assistance that IDA offers. The World Bank, through the International Development Association, provides knowledge sharing, policy advice, and capacity-building support, which will be crucial for Belize as it seeks to implement its Medium-Term Development Strategy. In particular, Belize can leverage these resources to enhance its institutional capacities in areas such as climate adaptation, disaster risk management, and public financial management. This increased collaboration will help Belize strengthen its domestic policies and improve its global competitiveness.
One of the first initiatives under IDA will be the Blue Cities project, which will help Belize improve its management capacity for sustainable development of its coastal areas and blue economy, increase safe water supply and reduce land-based pollution discharges in targeted coastal areas.
Belize also will benefit from the preparation of Catastrophe Deferred Drawdown Option (Cat DDO), which is a contingent financing line that will provide immediate liquidity to address shocks related to natural disasters and public health emergencies. The quick-disbursing Cat DDO will be an effective part of Belize’s broader risk management strategy and a critical instrument given Belize’s high exposure to natural disasters.
Additionally, the planned Early Childhood Care and Education and Female Employment project will focus on improving access to quality early childhood education services and boosting female employment opportunities.
“Belize’s membership to the International Development Association marks a significant milestone. This partnership opens up new opportunities for us to access crucial resources and support, enabling us to strengthen our resilience and improve the well-being of all Belizeans, " said Christopher Coye, Minister of State in the Ministry of Finance, Economic Development, and Investment of the Government of Belize. "Through this collaboration, we are better equipped to face global challenges - climate change being the main one - while advancing our national development goals.”
