This is the word from the Minister of Finance and the Public Service, Dr. Nigel Clarke as he delivered 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 we must take account of our realities and taking ownership means taking responsibility. A part of this reality is that, based on our location, we are subject to natural disasters and the incidences of these 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 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”
Dr. 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 Public Financial Management Policy for Natural Disaster Risk will consider Jamaica’s fiscal realities, our natural disaster related fiscal exposure, the pros and cons of various solutions available, our resource envelope and existing literature.
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.
The Minister 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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