By Godson Umejiego, Bureau Chief, The Americas
Belize will be able to access emergency funds more rapidly after a major hurricane thanks to a pioneering catastrophe swap executed by the Inter-American Development Bank (IDB), strengthening the country’s financial resilience and ability to respond to disasters over the next two hurricane seasons.
Under the transaction, the IDB arranged the transfer of a layer of Belize’s hurricane risk to international reinsurance markets through Swiss Re, which provides the underlying parametric coverage. The protection runs from August 1, 2026, through May 31, 2028, ensuring quick access to financing when pre-agreed hurricane triggers are met. The transaction provides up to US$20 million in coverage, subject to a maximum payout of $10 million per policy year.
The transaction, the first of its kind at the IDB, marks a significant step in efforts to develop innovative financial products and scale solutions for disaster-risk financing through Ready and Resilient Americas financial instruments (FIRRe). The operation creates a blueprint for strengthening resilience across Latin America and the Caribbean by showcasing how countries can transfer disaster risks to international markets and access rapid liquidity following extreme events.
The catastrophe swap is part of the IDB’s broader support to Belize in implementing its financial risk management strategy and strengthening the country’s financial resilience to disasters. The new risk-transfer protection complements the US$25 million in contingent financing already available to Belize through the IDB’s Contingent Credit Facility for Natural Disaster Emergencies (CCF) and the US$118 million in approved loans protected by Climate Resilient Debt Clauses (CRDC) that will allow the country to postpone principal payments for two years following the occurrence of an eligible natural disaster.
Backed by technical cooperation resources from the Ready and Resilient Americas Initiative, donor contributions from the French Climate Fund, and the government of Belize’s contribution toward the premium, the catastrophe swap highlights the importance of partnerships in scaling innovative financial solutions for resilience and reflects Belize’s strong commitment and engagement throughout the process.
