IDB loan to help cushion fiscal fallout from natural disasters

A US$285 million contingent loan from the Inter-American Development Bank (IDB) will bolster Jamaica's response efforts and help protect its public purse arising from emergencies caused by natural disasters.

The loan is intended to buffer the financial shock of a disaster on Jamaica's fiscal balance, thereby increasing the nation's financial stability and efficiency as well as its disaster preparedness and response, a statement from the IDB said.

The contingent financing, which is funded from the IDB's Ordinary Capital, has a maturity period of 25 years, a grace period of 5.5 years, and an interest rate based on LIBOR. The executing agency will be Jamaica's Ministry of Finance and the Public Service.

Jamaica has a population of 2.7 million and is ranked 19th in the world for its exposure to natural disasters, which include hurricanes, earthquakes, and droughts.

Between 1988 and 2012, eleven named storms made landfall in Jamaica. The most devastating of them was Hurricane Gilbert, which is estimated to have cost Jamaica 28 per cent of gross domestic product.

As the effects of climate change intensify, Jamaica can expect extreme weather events to become more frequent and more intense, resulting in greater impacts on the environment, the economy, and the population.

Moody's financial rating service lists Jamaica as among the four most vulnerable small-island countries when it comes to the credit implications of climate change.