Statement from Minister of Finance Nigel Clarke on funding Beryl damage

Statement from Minister of Finance Nigel Clarke on funding Beryl damage

"We are very fortunate that Hurricane Beryl did not make landfall in Jamaica as the trajectory of the centre of the hurricane Beryl passed 45 miles south of Kingston and continued just off Jamaica’s south coast. "

"Though there was significant damage in sections of the island, in many other parts, including much of Kingston, the ackees and mangoes remain on the trees.

The GOJ has strategically put in place a multilayered set of financial instruments to pre-finance the emergency response and recovery costs of natural disasters. While it is neither expected nor designed that all storms will trigger all instruments, the idea is that we should always be able to access resources from some instruments for every storm.

As such, the extent of the damage, as preliminarily and anecdotally assessed, will certainly mean that the GOJ will have to draw on all of the resources available in the first two layers: our Contingency Fund and the Natural Disaster Fund. This totals $4.5 billion.

We may also have to access some of the next layer which consists of a Contingent Credit Claim with the IDB. As such, today I initiated the process for this access. While the maximum amount under this layer is approximately $46 billion, it will take a few days to ascertain exactly how much of this Beryl will trigger as well as how much we will need.

We have a tropical cyclone and excess rainfall policies with the Caribbean Catastrophe Reinsurance Facility. We will know by end of business on Friday on possible payouts from the tropical cyclone policy but we have to wait until early next week to receive feedback regarding the excess rainfall policy.

Regarding the top layer in our disaster risk framework, the path and intensity of Hurricane Beryl did not trigger Jamaica’s Catastrophe Bond, which essentially serves the purpose of providing financial protection against a Category 5 or very intense Category 4 hurricane making landfall in Jamaica. Had Hurricane Beryl made landfall in Jamaica or had Hurricane Beryl retained its intensity as observed on Tuesday (as measured by centralized air pressure) it would have certainly triggered the Catastrophe Bond.

In addition to the above, the GOJ has a $140 billion precautionary and liquidity line (“PLL”) with the IMF. The PLL is intended for countries with strong fundamentals and can be drawn in the event of liquidity problems that emerge from natural disasters or economic shocks. While it is too early to rule anything out, we do not anticipate that Hurricane Beryl has led to, or will lead to, liquidity issues for the GOJ. At the current time therefore, this facility is therefore unlikely to be drawn.

Over the next few days, the GOJ will aggregate the estimates of damage and interventions required and finalise the total resources from disaster risk financing sources.

The GOJ has been proactive in arranging disaster risk financing that is contingent on the occurrence of natural disaster, in advance. As such we do not need to scramble in the aftermath of Beryl to finance the emergency response required.

Finally, it is important for us to bear in mind that Hurricane Beryl is only the first hurricane in the 2024 hurricane season. We will therefore need to continue to be prudent with resources, including the disaster risk financing resources, to ensure that we are also prepared for storms or hurricanes that may come later in this year’s hurricane season."