The Government of Jamaica in keeping with the requirement of the Fiscal Responsibility Framework has for the first time transferred funds to the Contingencies Fund to specifically provide for the possibility of natural disaster.
The Contingencies Fund is provided for in the Jamaican Constitution and was established under Section 13 of the Financial Administration and Audit Act to provide for unforeseen expenditure of any kind. The aggregate ceiling of the Contingencies Fund was raised to $100 million in 1992 and it has a balance of $94 million as at March 25, 2019.
Today in Parliament, Minister Clarke moved a resolution to raise the ceiling of the Contingencies Fund from $100 million to $10 billion to provide space for future transfers related to natural disaster risk coverage.
In taking the Third Supplementary Estimates for 2018/19, Minister of Finance and the Public Service, Dr. Nigel Clarke stated, "Jamaica's economic independence is threatened by our vulnerability to natural disasters. We are therefore breaking new ground by making this transfer of $2 billion to the Contingencies Fund. We intend to supplement this amount with further transfers in future years, in accordance with the Financial Administration and Audit Act. The Contingencies Fund will be available to Jamaica in times of natural disaster and will be an important layer in our financing of natural disaster risk."
In his 2019/20 budget presentation, Minister Clarke outlined the intent of the Government to develop a policy for the financing of natural disaster risk consisting of several layers including catastrophe bonds, contingent credit instruments, traditional insurance products like the Caribbean Catastrophe Risk Insurance Facility (CCRIF), fiscal savings in the Contingencies Fund and the annual budget.
The Minister noted, "Our history has been one where unplanned weather related recovery expenditure has consistently diverted scarce resources away from social and economic development priorities. Invariably vulnerable communities are the most affected; both from natural disasters and from diversion of planned budgetary expenditure. Financial planning and fiscal saving for the possibility of natural disaster, is therefore not only consistent with our goal of economic independence, it also provides a much needed safety net for vulnerable communities in times of natural disaster."
The Minister stated his intention to work with stakeholders to amend the Financial Administration and Audit Act to further specify the circumstances in which these fiscal savings can be drawn.
For further information contact:
Communication & Public Relations Branch
Ministry of Finance and the Public Service
30 National Heroes Circle
Tel: (876) 932-4656/4660/4655
Contact: Elaine Oxamendi Vicet/ Daniel Passley