US$8.8B disaster bill will ‘likely’ push Jamaica to borrow, PM Holness says

Prime Minister Andrew Holness says the Government will “likely” need to borrow to fund Jamaica’s reconstruction after Hurricane Melissa, which caused widespread destruction when it made landfall on October 28.

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Speaking at a hurricane recovery press conference at Jamaica House on Wednesday, Holness said the country will begin its rebuilding effort using the National Natural Disaster Recovery Fund (NNDRF). The fund pools proceeds from Jamaica’s disaster risk instruments, including the catastrophe bond, policies with the Caribbean Catastrophe Risk Insurance Facility, and contingent credit with the Inter-American Development Bank and the World Bank.

“Recovery and reconstruction activities will be financed initially from the National Natural Disaster Recovery Fund,” Holness said. “These amounts will total approximately US$650 million. It is likely that the government of Jamaica will have to borrow to finance reconstruction beyond what will be available in our NNDRF.”

Holness noted that Jamaica has “immediate access to approximately US$500 million from the IMF rapid financing facility (RFI),” emphasizing that the facility “does not come with policy conditionality.” In total, he said the country will start the reconstruction effort with “approximately US$1.15 billion in immediate funds.”

Despite that, he warned that the road ahead remains financially daunting. “Under normal circumstances, it would take us three fiscal years to spend such funds in capital expenditure,” he said, pushing back against claims that the Government is awash with cash. “There’s a lot of misinformation to suggest the government is receiving huge funds. The infrastructure damage alone is US2.9 billion and then there is the relief and recovery expenditure.”

Citing preliminary assessments, Holness said, “Just from the assessment here, which is not the final assessment, there is US$8.8 billion of damage for which the government would more likely be responsible for at least half. So there is still a gap that will have to be funded, and that will have to be funded by additional borrowing. So those who are of the view that the government can engage in a spending spree, thank God they are not the government.”

The updated damage estimate — US$8.8 billion, or nearly JMD$1.5 trillion — was presented at the same briefing by World Bank Country Director for the Caribbean, Lilia Burunciuc. She said the figure represents 41 per cent of Jamaica’s 2024 gross domestic product.

“This number assumes only physical damage,” Burunciuc stressed, noting that economic losses could be even greater. “Often, from our experience, it is a larger damage than the physical damage.” She added that this broader impact will be assessed once the valuation process is completed.

According to the World Bank’s breakdown, St. James, Westmoreland, and St. Elizabeth suffered the most severe effects of the storm, together accounting for US$5.5 billion, or 63 per cent, of total losses.

Residential buildings sustained the greatest hit, with US$3.7 billion in damage — 41 per cent of the overall figure — covering homes, their contents, and mixed-use structures classified as residential. Damage to non-residential buildings stands at US$1.8 billion, spanning commercial, industrial, tourism, and public facilities. Infrastructure losses total US$2.9 billion, while the agricultural sector absorbed an estimated US$389 million in damage.

Burunciuc said the World Bank will continue to work with the Government as Jamaica refines its assessments and begins the long process of rebuilding after one of the most destructive hurricanes in its modern history.