Wed | Jan 19, 2022

Gov't transfers $2 billion to Contingencies Fund towards natural disaster risk coverage

Published:Wednesday | March 27, 2019 | 2:31 PM
A house which was washed away in Mt. Lebanus, St Thomas during the passage of Hurricane Ivan in 2004 - File photo

The Government, in keeping with the requirement of the fiscal responsibility framework, has for the first time transfer funds to the Contingencies Fund to specifically provide for the possibility of natural disaster.

The Contingencies Fund is provided for in Jamaica’s Constitution and was established under Section 13 of the Financial Administration and Audit Act to provide for unforeseen expenditure of any kind.

The aggregate ceiling of the Contingencies Fund was raised to $100 million in 1992 and it has a balance of $94 million as at March 25, 2019.

Finance Minister Dr Nigel Clarke moved a resolution in Parliament yesterday to raise the ceiling of the Contingencies Fund from $100 million to $10 billion to provide space for future transfers related to natural disaster risk coverage. 

During the debate on the Third Supplementary Estimates for 2018/19, Clarke stated, “Jamaica’s economic independence is threatened by our vulnerability to natural disasters. We are therefore breaking new ground by making this transfer of $2 billion to the Contingencies Fund. We intend to supplement this amount with further transfers in future years, in accordance with the Financial Administration and Audit Act. The Contingencies Fund will be available to Jamaica in times of natural disaster and will be an important layer in our financing of natural disaster risk.”

In his 2019/20 budget presentation, Clarke stated that the government will see to develop a policy for the financing of natural disaster risk consisting of several layers including catastrophe bonds, contingent credit instruments, traditional insurance products like the Caribbean Catastrophe Risk Insurance Facility, fiscal savings in the Contingencies Fund and the annual budget.

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