Beryl: Despite severity, Jamaica can't access $150 million in disaster relief
The funds can't be accessed due to the terms of the agreement.
Hurricane Beryl caused widespread destruction in Jamaica last week, downing powerlines, crumbling infrastructure, and upending an estimated $6.4 million in food crops.
But, as Bloomberg recently reported, the nation won’t be able to access $150 million in financial aid from a bond established to cover natural disasters, despite Jamaica’s Prime Minister, the Most Hon. Andrew Holness, declaring the country a disaster.
Investors dodged the payout due to the terms of the bond.
“The air pressure required for a payout of the cat bond wasn’t reached,” reads part of an advisory sent to investors from Switzerland-based Plenum Investments, which holds a fund that is exposed to the bond.
Despite the hurricane’s strength, it did not meet the air pressure criteria at any time while over Jamaica.
Bloomberg reports that the World Bank set up the terms.
The $150 million, a potential lifeline for Jamaica, is held in a cat bond, a unique financial instrument funded by global investors. This bond is structured so investors are paid 7 per cent above the US Treasury’s rate. It provides catastrophe insurance for four hurricane seasons, provided those storms meet the pre-determined criteria.
Jamaica has a disaster reserve of $1.6 billion that will be used to rebuild the country post-Beryl.
How to help
The Canadian Red Cross has launched an appeal to provide aid to residents most affected by the storm.
“Money raised will enable the Red Cross to provide immediate relief, support recovery efforts, and resilience and preparedness activities for future events,” the organization says in a statement.
“The activities and areas impacted may evolve based on emerging needs and compounding future events.”
Canadians looking to support the Hurricane Beryl Appeal can contribute online at redcross.ca or by calling 1-800-418-1111.
Header image: NOAA satellite imagery_July 3
