Where’s our rainy-day money?
APIECE of news that perhaps escaped the attention of many people last year was the disgruntlement among members of parliament’s Public Administration and Appropriations Committee (PAAC) about the country’s inability to draw down sums under the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF).
A Gleaner story on May 17, 2017, noted that since Jamaica signed up with CCRIF in 2007, the country has yet to draw down a dollar, despite several catastrophic weather events.
Under questioning from PAAC members Fitz Jackson, Mikael Phillips and Chairman Wykeham McNeill, Financial Secretary Everton McFarlane revealed that Jamaica paid a premium of US$4.9 million into the CCRIF for the 2016-17 financial year, a discount on the annual premium of US$6 million. My research shows that Jamaica, one of the loudest agitators for the creation of the CCRIF, has never missed a payment.
Fast-forward a few weeks, and with flood rains wreaking havoc in several parts of the island in June, the PAAC demanded and got an answer from the finance ministry regarding the likely payout of insurance money from CCRIF to assist with repairing the ensuing damage.
According to the ministry’s note, no funding could be accessed under CCRIF because the reported flood damage fell below the US$200-million threshold set by the facility.
PAAC members were left fuming, especially after the NWA revealed that the extent of the damage caused by flood rains in June was US$100 million! So consider that this country, which is still in a precarious economic position, suffers $12.5 billion in damage because of flood rains in one month alone and is ineligible to draw down a cent to assist with the repair and recovery effort? Shame.
I raise this issue at the start of the hurricane season for the benefit of those who will fume when the inevitable rains come and cause serious damage to livelihoods and infrastructure while making a mockery of the Government’s projections for economic growth over the current fiscal year.
DRAWDOWN EXPECTED
The payment of a sizeable annual premium into the CCRIF represents Jamaica saving for a rainy day. And when the rain comes and causes catastrophic damage, we should reasonably expect drawdown. The fact that we have never got a drawdown, despite our history of weather catastrophes since 2007, means our Government needs to renegotiate the matrix or formula used to assess damage in CCRIF member countries.
The 2015-2018 Strategic Plan published by CCRIF shows that 12 payouts totalling approximately US$35.5 million were made to eight countries between 2007 and 2014. Of course, Jamaica is not on the list, but the receiving countries were Barbados, Anguilla, St Kitts and Nevis, St Vincent and the Grenadines, St Lucia, Dominica, Haiti and the Turks and Caicos Islands.
Anguilla received US$1,052,714 from CCRIF for damage caused by excess rainfall in October and November 2014. St Kitts and Nevis received US$1,055,408 for two days of excessive rainfall in November 2014, while Barbados received US$1,284,882 in 2014 for excessive rainfall on November 21, 2014.
While those economies are smaller than Jamaica’s, I would argue they are no less vulnerable, given we are all countries surrounded by water dependent on tourism and remittances to earn the bulk of our foreign exchange.
Figures from the National Library and the Planning Institute of Jamaica show that since our Government started paying into CCFRIF in 2007, the country has suffered $23.8 billion in damage from Hurricane Dean (2007), $10 billion in damage from Tropical Storm Nicole (2008), $14.5 billion in damage from Tropical Storm Gustav (2008), and $9.7 billion in damage from Hurricane Sandy (2012).
Yet, after funding an annual insurance premium to protect against these events, the taxpayer still has to fork out the billions needed to pay for the damage caused by these weather catastrophes. Government, sumting wrong!
Selah.