AMIDST escalating climate-related challenges, Finance Minister Fayval Williams is in talks with the World Bank about potentially implementing a new disaster-resilient financial instrument.

The new instrument is aimed at bolstering Jamaica’s capacity to swiftly recover from natural disasters and economic shocks, and complements existing mechanisms such as the National Disaster Fund and catastrophe bonds.

“[Tuesday], at a meeting with World Bank, they were describing a product to me that sounds very interesting. In the event of a disaster, this new product would allow us to use existing resources from those facilities that they have provided…so we have access immediately and then they would replenish later. I think it’s a very interesting product that I will be exploring with them,” Williams at the Mayberry Investments Investor Forum on Wednesday.

The urgency of these discussions comes amid the Caribbean’s increasing vulnerability to climate change. Recent years have witnessed a surge in extreme weather events, including hurricanes, droughts, earthquakes and heatwaves, significantly impacting the region’s infrastructure, economies, and communities. Notably, Hurricane Beryl in 2024 caused widespread devastation across the Caribbean and highlighted the need for robust disaster response strategies.

Regional forecasters have warned that 2025 is likely to be another year of climate extremes. Conditions are ideal for successive years of heightened climate variability, with record-high temperatures observed in both ocean and atmospheric conditions.

Jamaica has been proactive in developing a layered approach to disaster risk financing. The issuance of catastrophe bonds in 2021 provided immediate access to funds following qualifying disasters, such as hurricanes of a certain severity. Parametric insurance policies have also facilitated rapid payouts based on predefined criteria, expediting recovery efforts. Additionally, the National Disaster Fund has been instrumental in providing immediate resources for restoring infrastructure and services after disasters.

The proposed World Bank product aims to enhance these existing mechanisms by offering another layer of protection.

As Jamaica prepares for the 2025/26 budget, Minister Williams also reiterated the Government’s commitment to fiscal prudence, focusing on balancing the budget while creating space for growth.

One of the key fiscal goals is reducing Jamaica’s debt-to-gross domestic product ratio to 60 per cent by fiscal year 2027/28, a target that Williams reaffirmed during the forum. Additionally, maintaining inflation within a four to six per cent range remains a priority for the Bank of Jamaica, which has been successful in keeping core inflation within this target for 17 consecutive months.

When questioned about the possibility of new taxes in the upcoming budget, Minister Williams avoided providing a direct answer, noting the government’s rigorous budgeting process. “We are still in the process of finalising the numbers, and we are working through the budget carefully. What I can assure you is that we remain committed to fiscal discipline,” she said.

She also highlighted the importance of a strong relationship with key agencies like the Tax Administration of Jamaica and the Jamaica Customs Agency, which help ensure that Jamaica’s revenue projections are met and provide stability for the business community.

WILLIAMS…at a meeting with World Bank, they were describing a product to me that sounds very interesting.