ImpactAlpha, July 26 — The bond will allow the government of Jamaica to quickly secure capital for recovery and to respond more rapidly if the Caribbean country is hit by three tropical storms or hurricanes before the end of 2023.
The U.S. Agency for International Development, the German and U.K. governments provided financial support for the transaction through the World Bank’s Global Risk Financing Facility.
“This catastrophe bond adds an indispensable layer of disaster risk financing,” said Nigel Clarke, Jamaica’s minister of finance. Jamaica is the first Caribbean country, and the first small island country, to independently sponsor a catastrophe bond, the World Bank said.
Catastrophe bonds were the model for the World Bank’s first pandemic bonds, issued in 2017 after the Ebola outbreaks in West Africa to provide “surge funding” to low-income nations to respond to pandemics. The bank was criticized, however, when the bond failed to pay out during the Democratic Republic of Congo’s Ebola outbreak in 2018.
In 2020, the bond wasn’t triggered until five weeks after the World Health Organization declared a global pandemic. (see, “Amid wave of COVID relief bonds, the World Bank’s pandemic bond has yet to pay out”).