Senate backs amendment to FAA Act
$10 billion cap on Natural Disaster Reserve Fund eliminated
The Senate on Friday approved amendments to the Financial Administration and Audit (FAA) Act, removing the cap on the maximum amount that may be held in the National Natural Disaster Reserve Fund (NNDRF).
The vote in the Upper House also eliminates the annual mandatory transfers from the Consolidated Fund to the NNDRF, once the balance is at or above $10 billion.
Minister of Foreign Affairs and Foreign Trade, Senator Kamina Johnson Smith in piloting the bill, pointed to the removal of section 13(A)(1A)(i), which makes provision for the transfer of $200 million from the Consolidated Fund to the NNDRF during financial year 2023/2024.
She reminded that the NNDRF was established pursuant to the FAA Amendment Act 2024 to provide a facility consisting of transfers or issues from the Consolidated Fund principal bank account, funds from the triggering of any natural disaster instruments that may exist, and funds from any other indicated source of flows.
“The NNDRF enabled an immediate financial response to a disaster affecting Jamaica that has a fiscal impact equivalent to, or greater than 1.5 per cent of GDP and which triggers a disbursement under a natural disaster instrument held by or on behalf of the Government of Jamaica,” Johnson Smith said.
The Government senator noted that when the bill was passed in 2024, “One would not have contemplated that we would have had the type of disaster [like Hurricane Melissa] that we’ve just been through”.
She added that, “the establishment of the $10 billion threshold seemed ambitious [at the time] and here we are less than two full years later…”
Johnson Smith reminded the Upper House that the Government also built a proactive, multi-layered disaster risk financing framework which included a catastrophe bond, making Jamaica the first small state to sponsor its own catastrophe bond, “one to which Melissa has given great global visibility”.
The Leader of Government Business in the Upper House cited that “Hurricane Melissa clearly triggered several instruments, resulting in a flow of resources well in excess of $10 billion”. She emphasised that while the amendments remove the $10 billion as a cap, it remains as a threshold.
During their contribution to the debate, Opposition Senators questioned the rationale behind stopping the annual payments of $200 million from the Consolidated Fund into the NNDRF at a time of more intense natural disasters.
