Tuesday 22 September, 2020

Jamaica to implement policy to mitigate against natural disasters

Finance Minister Dr Nigel Clarke. Photo via Nigel Clarke's Twitter page.

Finance Minister Dr Nigel Clarke. Photo via Nigel Clarke's Twitter page.

Jamaica will develop a financial management policy for natural disaster risk before the end of its Precautionary Stand-By Arrangement with the International Monetary Fund (IMF).

The policy, titled “Public Financial Management Policy for Natural Disaster Risk” will be combined with a ten-year operational plan and takes into account fiscal space and other limitations.

Minister of Finance and the Public Service, Dr. Nigel Clarke announced plans to implement the policy whilst delivering the keynote address at the 32nd Annual Sales Congress of the Caribbean Association of Insurance and Financial Advisors (CARAIFA) last week.

Clarke said Jamaica must take into account its realities while achieving and maintaining economic independence.

“Today, and for the next 18 months, Jamaica is in a Precautionary Standby Arrangement with the IMF. Within the context of this program with the fund, we have access to significant resources should we need them. As we move towards the end of this program relationship with the IMF with the commensurate stand-by line of credit that it offers, it is important that we consider measures that can moderate the fiscal impact of natural disasters”

Clarke made the point that natural disasters have a fiscal cost which can result in unplanned public expenditure along with a reduction in budgetary revenues.  Whilst noting “that we won’t be able to insulate ourselves completely” Clarke stated that “Natural disaster can set small countries back for years. Jamaica has done too much, made too many sacrifices to leave us completely exposed in a post-Program environment”

The policy will improve understanding of fiscal risks of natural disasters, and recommend appropriate public financial management for natural disaster risk including the implementation of various financing strategies.

Clarke gave potential examples such as Contingent Credit Facilities with multilateral institutions, Catastrophe Bonds, the development of a Natural Disaster Fund, and accessing Climate Financing for adaptation and mitigation purposes.

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