Bahamas to tap dormant accounts to boost Disaster Emergency Fund

The Bahamas government is defending its decision to table legislation to transfer funds from dormant accounts into the country’s Disaster Emergency Fund, citing the pressing need to address climate-related risks that account for an estimated 40 per cent of the nation’s debt.

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Prime Minister Philip Davis told Parliament that disaster preparedness must be proactive, sustained, and robust, ensuring the government can respond swiftly, effectively, and equitably when storms strike. “One of the things we have learned is that disaster preparation, and the funding and infrastructure that support it, must be proactive. It must be sustained, and it must also be robust enough to account for the threats we face,” Davis said.

Highlighting lessons from Hurricane Dorian in 2019, Davis said the administration has shifted from reactive disaster management to disaster risk management, focusing on risk reduction, mitigation, preparedness, and recovery. The establishment of the Disaster Risk Management Authority (DRMA) and the passage of the Disaster Risk Management Act, 2022, marked key milestones in building a structured and accountable system.

The new funding strategy, developed by the Ministry of Finance in consultation with the DRMA and supported by the Inter-American Development Bank, uses advanced risk analyses and post-disaster assessments to quantify potential losses and enhance the nation’s financing capacity. “The findings from the work of these experts are sobering. The government faces potential losses of up to US$700 million from major hurricane and flood events,” Davis said.

The legislation currently before Parliament would authorize the transfer of US$17 million from dormant accounts held by the Treasurer into the Disaster Emergency Fund, ensuring sufficient liquidity for response, rehabilitation, recovery, and financial protection measures. “These dormant accounts are, essentially, unclaimed resources that can now serve a national purpose. Resources that were sitting idle can now be used to invest in our future and serve as the first line of defence when disaster strikes,” the Prime Minister said.

Davis emphasized that regulations are being developed to govern the use of these funds, including accountability measures, investment strategies for unused funds, and activation protocols. “By capitalising this fund today, we are advancing the goals of our Comprehensive Financial Strategy for Disaster Risk Management. And we are reducing potential losses by 45 per cent over the next decade, which will improve fiscal resilience so that each storm that makes landfall does not drive us deeper into debt,” Davis said.

The Prime Minister concluded, “We cannot prevent storms from forming. But we can strengthen our nation’s capacity to withstand and recover from them. That is what today is about.”