Barbados secures $30M World Bank loan to boost disaster response

Barbados has secured a $30 million loan from the World Bank to enhance its disaster risk management and ensure quicker, more effective responses in the face of emergencies. 

The Disaster Risk Management Development Policy Loan includes the Catastrophe Deferred Drawdown Option (Cat DDO), an innovative World Bank financing instrument that will provide a fast-access line of credit to support a timely and effective response once an emergency is declared.

This mechanism ensures that the country can mobilise resources quickly, without the delays that typically accompany traditional financing methods.

This project arrives at a critical time for Barbados, the World Bank noted. Despite its strong economic recovery, the country remains highly vulnerable to natural hazards. In 2024, Hurricane Beryl passed within 150 kilometres of the island, causing damage estimated at 1.4 per cent of GDP and severely affecting the fisheries and tourism sectors. Rising sea levels and stronger hurricanes are predicted to intensify risks in the years ahead. Public health emergencies, such as the COVID-19 pandemic, have also shown the importance of having reliable, flexible funding to respond rapidly and protect essential services.

“The Cat DDO will provide Barbados with a vital financial buffer, allowing the government to respond swiftly to emergencies without diverting resources from other priorities or compromising long-term development goals,” the World Bank said in a statement issued on Thursday when its Board of Executive Directors approved the financing.

To access the Cat DDO, Barbados will implement a set of key reforms focused on two core areas: enhancing financial resilience and strengthening physical planning and livelihoods. This will involve introducing policies to improve disaster risk financing, developing scalable social protection mechanisms, enacting legislation to support sustainable fisheries, strengthening coastal and marine management, and storm water management.

“Barbados, like many small states, is working to build resilience amidst severe and growing shocks. The Catastrophe Drawdown Option will strengthen the country’s ability to respond swiftly when disasters strike and protect its people and communities,” said World Bank Division Director for the Caribbean, Lilia Burunciuc.

This initiative complements the recently approved Barbados Beryl Emergency Response and Recovery Project which supports the rehabilitation of the fisheries sector, Bridgetown Port, and critical infrastructure damaged by Hurricane Beryl. 

Barbados joins other Caribbean countries that are using Cat DDOs to build financial buffers and institutional capacity to handle increasing disaster risk, including St Vincent and the Grenadines, Jamaica, Grenada, Dominica, and Saint Lucia.

Financial support for technical assistance for necessary policy reforms was and will continue to be provided by the European Union through the EU Resilient Caribbean Programme, managed by the Global Facility for Disaster Reduction and Recovery. (PR/BT)