KINGSTON, Jamaica, CMC – The Government has put in place measures for the funding of emergency costs associated with natural disasters that involve billions of dollars.
Speaking at the 54th annual Monetary Studies (AMS) conference on Wednesday, Finance Minister Dr. Nigel Clarke said the suite of products is essential to the country’s disaster framework and enables the Government to respond to multibillion-dollar emergency costs associated with natural disasters.
“We have a natural disaster fund; we have a contingency fund, and together they have about $5 billion. We have a credit contingent claim with the IDB for over US$285 million, that’s over J$40 billion,” the Minister said.
“We have the Caribbean Catastrophe Risk Insurance Facility, which provides limited coverage for earthquake and excess rainfall, and we have something for tropical cyclones, and then on top of that, Jamaica became the first small island State in the world to independently sponsor a catastrophe bond, which is US$185 million or approximately J$30 billion,” he added.
He said the earthquake that impacted the island on October 30 “brought home the need for us to make sure that we don’t wait for a disaster to start planning how we are going to finance the emergency costs that come out of it.”
Clarke pointed out that the multilayered approach involving significant resources pioneered by the Government helps to ensure that the country can finance emergency costs associated with natural disasters.
“Those are the costs that you can’t defray, the ones that can take a fiscal program off track because you have no choice but to address them. What we want to do in our disaster framework is to have financial products that give the Government the capacity to respond to emergency costs of natural disasters, and Jamaica is pioneering that in the region, indeed in the world, by having a suite of products that can increase the capacity of the Government,” he said.
“We must include other products, and we must continue to capitalize our natural disaster fund and our contingency fund to ensure that Jamaica is not left to the mercy of donors after the fact, in the event of a natural disaster,” he added.
He added that small island States such as Jamaica should incorporate considerations of climate change into their financial policy.
“We are operating in an era where climate change is a reality, temperature rises are real, and those temperature rises lead to sea-level rises, which affect island States like ours. We have to incorporate considerations of climate change into financial policy, into financial-sector policy, and even into fiscal policy, and Jamaica is well positioned in that regard.”
“Our 2030 action plan that was tabled in 2009 recognizes climate change as a legitimate area that ought to influence national policy. We have a National Adaptation Plan that is to be finalized, and the Central Bank is collaborating with multilateral institutions to find the best way to incorporate climate change considerations in disclosure requirements for financial institutions and in finding ways to stress-test according to climate-change criteria,” the Finance Minister noted.
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