JAMAICA’S financial system is resilient enough to withstand the impact of Hurricane Melissa, the country’s central bank said on Tuesday, even as new estimates reveal the Category-5 storm caused a record US$8.8 billion in damage, equivalent to 41 per cent of the island’s gross domestic product (GDP).

The Bank of Jamaica (BOJ) acknowledged the hurricane is “expected to adversely affect domestic GDP growth” and test the debt-servicing capacity of households and key sectors. However, it expressed confidence in the system’s buffers.

In a Financial Policy Statement, the Bank of Jamaica’s (BOJ) Financial Policy Committee (FPC) said the domestic system had been stable leading up to the hurricane. This stability is underpinned by robust capital buffers, according to the latest public regulatory data from June 2025. The system-wide capital adequacy ratio stood at 14.63 per cent, well above the regulatory minimum of 10 per cent, providing a $274.35 billion capital base.

Furthermore, non-performing loans were at a historically low 2.71 per cent, and banks had set aside provisions covering 103 per cent of all bad loans, creating a significant buffer for an anticipated uptick in defaults.

The scale of the challenge is now clearer. A Global Rapid Damage Estimation report from the World Bank and Inter-American Development Bank, published on Wednesday, found the US$8.8 billion in physical damage makes Melissa the costliest storm in Jamaica’s history. Residential buildings accounted for 41 per cent of the damage.

Despite these headwinds, the FPC said the deposit-taking sector remains “well positioned to absorb this deterioration” due to the strong pre-hurricane metrics.

The committee also said that whilst insurance claims are likely to increase, insurer solvency should not be “significantly impaired” because of strong reinsurance coverage. It noted that low property insurance penetration in some of the worst-hit parishes would also limit the industry’s overall exposure.

The economic impact is expected to be softened by financial support from international partners and the activation of the Government’s disaster risk financing framework. The World Bank and IDB have pledged a “fast, coordinated, and evidence-based response” for the reconstruction phase.

The central bank has conducted stress tests which indicated that the financial sector possesses “sufficient capital and liquidity” to manage the fallout.

“The BOJ stands ready to provide the necessary liquidity support to deposit-taking institutions should the need arise and to maintain orderly conditions in the foreign exchange market,” the statement said.

Looking ahead, the committee identified climate-related shocks as a “significant risk” to Jamaica, a point underscored by the historic scale of this disaster.