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Jamaica to develop financial policy for natural disaster risk

Monday, April 30, 2018

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KINGSTON, Jamaica — Minister of Finance and the Public Service, Dr Nigel Clarke, says Jamaica will develop a Public Financial Management Policy for Natural Disaster Risk prior to the end of its Precautionary Stand-By Arrangement with the IMF.

The policy, Clarke said, will be combined with a ten-year operational plan for its implementation and will be done with the technical assistance of multilateral partners.

The minster made the announcement while delivering the keynote address at the 32nd Annual Sales Congress of the Caribbean Association of Insurance and Financial Advisors (CARAIFA).

He 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," he said.

“Today, and for the next 18 months, Jamaica is in a precautionary standby arrangement with the International Monetary Fund (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."

He pointed out that natural disasters have a fiscal cost which can result in unplanned public expenditure along with a reduction in budgetary revenues.

Whilst noting, “we won't be able to insulate ourselves completely," Clarke said “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-programme 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 minister said.

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, he added.

Clarke 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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