Gov’t Working to Reduce Jamaica’s Climatic Vulnerability

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says the Government is working to reduce Jamaica’s climatic vulnerability by instituting a “suite of financial instruments that can pay out in the event of a natural disaster”.

He noted that Jamaica became the first small country globally to independently sponsor a catastrophe bond that provides fiscal resources to respond to catastrophic events.

The Minister was speaking during the virtual discussion forum, ‘Let’s Connect with Ambassador Marks’, hosted by Jamaica’s Ambassador to the United States, Her Excellency Audrey Marks, on Thursday (June 22).

Dr. Clarke explained that the bond is complemented by other products, namely the Inter-American Development Bank (IDB) Credit Contingent Claim, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and a Natural Disaster Fund for which work is still in progress.

“That suite provides us with some degree of resilience building to the possibility of climate shocks. We have to work on increasing our resilience to energy commodities. That’s still a work in progress. We import about US$2 billion worth of energy commodities per year, about 11 per cent of GDP [gross domestic product], which is far too much,” he said.

Noting that dependency on imports can potentially undermine Jamaica’s economy in the event of price spikes, Dr. Clarke said the Government is “working on a transition to renewable energy to reduce that structural vulnerability”.

Meanwhile, the Finance Minister maintains that Jamaica’s recovery from the COVID-19 pandemic speaks volumes about the country’s resilience.

He advised that the country’s reserves are in excess of US$4.2 billion which puts Jamaica in “very strong standing monetarily”.

Dr. Clarke pointed out that Jamaica’s source of vulnerability in the past was fiscal, mainly due to the country’s high debt, which had compromised the Government’s ability to respond to crises and finance growth-inducing capital expenditure.

“We have had vulnerability as far as our exposure to foreign exchange shocks because we just had insufficient reserves in the central bank and we have addressed that… made the central bank independent, and, in so doing, the non-borrowed reserves increased by US$1 billion between about 2016 and 2020, which put us in a good position going into COVID,” he stated.