The fiscal policy of the government of St. Vincent and the Grenadines should include a strategy to build financial defences against natural disasters, the International Monetary Fund (IMF) says.
“Given the challenge to finance the reconstruction when a natural disaster materialises, it is advisable for the government to self-insure against this occurrence,” the IMF said this week, after its regular consultations in SVG earlier this month.
The IMF said that preparedness for hurricanes has improved, as have building codes and housing stocks.
It further noted that the Government’s comprehensive disaster management approach, developed with multilateral partners, is being reviewed by Cabinet.
Based on historical data, the average annual damage from natural disasters in SVG is 1.2 per cent of GDP, of which about three-quarters are the responsibility of the government, the IMF said.
“This indicates that an annual amount of 0.9 per cent of GDP would constitute an adequate buffer against natural disasters,” it pointed out.
SVG has been impacted by several extreme weather events since 2010, including Hurricane Tomas that year, the April Floods of 2011, and the Christmas Floods and landslides of 2013.
In addition, the nation has had to contend with several dry spells since then.