Jamaica’s Finance Minister Dr. Nigel Clarke has said the country’s first catastrophe bond (CAT) had been deferred to the next financial year due to the pandemic.

Clarke made the revelation during Tuesday’s sitting of the House of Representatives.

According to Clarke, the country had planned to secure its first CAT bond but the World Bank informed him that the market had been closed.

“We are unable to place that instrument because there’s no provider. There’s nobody stepping forward, wanting to take on new risk in the pandemic; or so we have been informed in writing by the World Bank,” explained Clarke.

He further explained that not going through with the bond saved the government approximately J$1 billion.

The finance minister told the House that the earliest the country would likely be able to go back into that market and get coverage would be in the first quarter of 2021.

What level of coverage, in the event of a catastrophe, does Jamaica have now?

Despite being unsuccessful in securing the bond, he noted that the country still had at least four layers of protection in the event of a natural disaster.

According to Clarke, the country’s approach to disaster risk management is multi-layered, noting that each year the government sets aside money in its current budget for such events.

In addition, Clarke notes that there is also a contingency fund, a facility from the International Development Bank and the Caribbean Catastrophe Reinsurance facility that the country can utilise in the case of a natural disaster.

Clarke went on to explain that, due to the heavy rainfall associated with the weather systems Eta and Zeta in 2020, the country had to utilise its contingency fund but was able to replace it.

“We had transferred J$4 billion to that contingencies fund, which we have drawn down on twice and have since replenished. We drew down on it in the pandemic, and we drew down on it during the recent heavy rainfalls and we replenished, so we have that protection,” said Clarke.

However, Clarke admitted that not being able to secure the CAT bond meant that the country missed out on more than US$100 million in additional protection.

“We’re looking at somewhere in the region of, let’s say, US$140 million to US$200 million or thereabout. So, you know, J$30 billion,” responded Clarke as he was pressed by Opposition Leader Mark Golding to provide a dollar value for the level of protection that Jamaica was not able to access due to the markets being closed.

Clarke also used the occasion to share that the government had received a total of US$20 million in grant funding from the Global Risk Financing Facility (GRiF), in addition to the US and Canadian governments, to assist with paying  premiums.