Financial management policy for natural disasters by December – Clarke

WESTERN BUREAU:

Finance Minister Dr Nigel Clarke says that the passage of Hurricane Dorian, which battered The Bahamas, has pressed home the need for Jamaica and its Caribbean neighbours to establish fiscal responses to safeguard against natural disasters.

“The onslaught of Hurricane Dorian in The Bahamas, which follows on the hurricanes of the previous season, has focused minds and has focused attention on the need for countries in our region to have a fiscal response to natural disasters, “ Clarke said in an interview with The Gleaner following his closing addressing at the Inter-American Development Bank (IDB) Latin America and the Caribbean Group 25th Annual Meeting in Montego Bay on Thursday.

According to Clarke, Jamaica has long recognised the need to secure the country from sudden shocks, given the hard work and sacrifices the nation has endured individually and collectively.

“In Jamaica, we have been putting in place elements of a public financial management [system] for natural-disaster risk that started in March of this year when, for the first time, we transferred $2 billion into an account at the central bank only to be drawn down in the event of a serious natural disaster, and we hope, over time, to build on that so that we build a pool of fiscal savings,” Clarke said.

“But we are not stopping there last year, we negotiated in Jamaican dollars an approximately $45-billion contingency credit claim with the IDB that gives Jamaica access to that amount in the event of a natural disaster,” added Clarke.

WORKING WITH WORLD BANK

According to Clarke, Jamaica is continuing to work closely with the World Bank to ensure that measures are in place in the event of a natural disaster.

“We are working with the World Bank on a risk-transfer instrument such as a catastrophe bond where we can pay premium over time and transfer a certain dollar value of risk to the international capital markets that pay that amount in the event of a natural disaster,” said Clarke.

“The idea is that over time, when you look at what we have in our fiscal natural disaster fund in the central bank, when you look at what we have from the contingent credit claim, we want to make sure that we have access to a pool of funds that can help Jamaica deal with any emergency experiences that arise in the event of a natural disaster,” the minister added.

Clarke further noted that the country will have a clear and concise policy on public financial management for sudden acts of natural disasters by December.

“We are going to build a national consensus around it. It’s so important – not something for one administration to do and then another administration changes. Jamaica has worked too hard, we have come too far, we have made too many sacrifices to leave ourselves entirely exposed to the risk of natural ­disasters,” Clarke added.