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There is a new allocation in the budget for payment to the Caribbean Catastrophe Risk Insurance Facility (CCRIF), which provides coverage against hurricanes and earthquakes.
Eighteen Caribbean countries will be covered under the facility and they will be able to draw on funds if hit by hurricane or earthquake. The facility will become operational in time for the hurricane season in June.
“This will facilitate immediate commencement of restorative work or in some circumstances, payments to maintain basics services,” said Finance and Planning Minister, Dr. Omar Davies, as he opened the 2007/08 Budget Debate yesterday (April 12) in the House of Representatives.
He informed the House that at present, flood coverage was not included in the coverage. “The difficulty here is that unlike hurricanes and earthquakes, there is no international measure for floods against which insurance payments can be made,” he explained, noting that as a result of this limitation, Guyana had declined to join the fund.
“Our goal is to have further technical work carried out so that the range of disasters, which can be covered will be broadened, not only to accommodate Guyana, but also to address the negative repercussions of floods in some existing member countries including Jamaica. It will also be desirable if membership in this facility were open to all Caribbean countries,” he told the House.
The CCRIF came out of a meeting of the World Bank/International Monetary Fund following the devastation caused by Hurricane Ivan in 2004.
Dr. Davies, who spoke on behalf of Caribbean Finance Ministers at the meeting, said he was “struck by the inadequacy of the response of multilaterals and bilaterals (agencies)” to the situation facing Grenada, Haiti and Jamaica as a result of the hurricane.
“In Grenada’s case, all economic activities were devastated following the hurricane. However, apart from some grants by bilateral sources, the main response from the multilaterals was to offer Grenada more loans for reconstruction, even when it no longer had the capacity to repay its existing debt,” he noted.
Dr. Davies said that he “challenged the multilaterals to work with the Caribbean to develop a more useful and realistic response.” This challenge was taken up by the World Bank, which then conducted technical assessments along with the Jamaica Social Investment Fund. The World Bank and donor countries have since pledged US$47 million to the insurance facility.
Meanwhile, the Finance Minister indicated that the CCRIF would serve as a pilot programme that could soon be extended to other small states, such as those in the Pacific Islands.