Ministry to develop disaster risk policy
Prior to the end of the current precautionary standby arrangement with the International Monetary Fund (IMF), Jamaica will develop, with the technical assistance of multilateral partners, a public financial management policy for natural disaster risk.
The policy is to be combined with a 10-year operational plan for its implementation that takes into account fiscal space and other limitations.
Minister of Finance and the Public Service Dr Nigel Clarke made the announcement last Sunday while delivering the keynote address at the 32nd annual sales congress of the Caribbean Association of Insurance and Financial Advisors (CARAIFA).
The minister noted that, in achieving and maintaining economic independence, Jamaica must take account of its realities - and that taking ownership meant taking responsibility. Part of this reality is that, based on its location, the country is subject to natural disasters, which have been increasing over time.
"Today, and for the next 18 months, Jamaica is in a precautionary standby arrangement with the IMF. Within the context of this programme with the fund, we have access to significant resources should we need them," Clarke told the gathering.
"As we move towards the end of this ... relationship with the IMF, with the commensurate standby line of credit that it offers, it is important that we consider measures that can moderate the fiscal impact of natural disasters," he added.
The finance minister made the point that natural disasters have a fiscal cost that can result in unplanned public expenditure, along with a reduction in budgetary revenues. While noting "that we won't be able to insulate ourselves completely", Clarke stated that "natural disasters can set back small countries for years. Jamaica has done too much, made too many sacrifices, to leave us completely exposed in a post-programme environment," he said.
Clarke said that the public financial management policy for natural disaster risk will consider Jamaica's fiscal realities, natural disaster-related fiscal exposure, the pros and cons of various possible solutions, among other factors. He added that the policy would 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.
The finance minister gave examples such as contingent credit facilities with multilateral institutions, catastrophe bonds, the development of a natural disaster fund, as well as accessing climate financing for adaptation and mitigation purposes.