The Unassuming Economist

A new IMF country report says that “The Bahamas is disproportionately exposed to natural disasters – both in terms of frequency and associated costs. An appropriate disaster risk-management strategy should be wide ranging, from strengthening resilience through capital and infrastructure investments, having a multilayer disaster risk financing plan, and strengthening fiscal and external buffers. Along these lines, staff proposes the creation of a natural disaster savings fund of a target size of 2-4 percent of GDP.”

“The savings fund should be government by clear rules on inflows and outflows as well as transparency requirements. Clear objectives and disbursement rules and triggers based on verifiable criteria are critical. The fund should have prudent and transparent investment policies and should be consolidated with budgetary information to allow assessment of the overall fiscal situation. At a minimum, the fund balance should appear in financial statements, and drawdowns
should appear in budget execution reports.”