Facing drought, COVID-19, and hurricane season, Saint Lucia bolsters its disaster risk financing plans

Dealing with COVID-19 during a hurricane season and a drought can be particularly daunting for Saint Lucia, especially as the weather crises could exacerbate the health crisis.

Fortunately for Saint Lucia, the health-related impacts of COVID-19 has, so far, been limited. However, the economic consequences of the global pandemic have been serious.

Since tourism accounts for approximately two thirds of the country’s GDP, Saint Lucians acutely feel any disruption to that sector. So, when the government decided to close borders on March 23—a move that limited the virus’ importation and spread, but also effectively shut down the tourism industry—it led to severe economic impacts. Restrictions on related businesses such as restaurants and bars, as well as nightly curfews, have magnified the economic downturn.

“What we’re facing right now is a liquidity challenge,” says Nadia Wells-Hyacinth, Director of Financial Administration in the Ministry of Finance, Economic Growth, Job Creation, and External Affairs. “We've gotten a lot of support from the international community as relates to commitments to support the health response,” she says, but also notes that the government is now in need of financial support for non-coronavirus-related services that are now underfunded due to a depleted budget.

If there were ever a scenario that highlights the importance of a robust disaster risk financing strategy, this is it. In 2018, the World Bank, in collaboration with Saint Lucia’s Ministry of Finance, produced an analytical report that identified gaps and provided specific recommendations for strengthening the country’s disaster risk financing framework. Similar analyses were conducted for three other countries in the region under the World Bank’s Caribbean Disaster Risk Financing Technical Assistance Program—an initiative financed by the European Union under the Africa, Caribbean, Pacific - European Union Natural Disaster Risk Reduction Program, managed by the Global Facility for Disaster Reduction and Recovery (GFDRR).

Drawing from the report’s findings, Saint Lucia’s Cabinet of Ministers approved a Disaster Risk Financing Strategy in April 2018 to better prepare for future challenges. The government has already implemented a number of these measures, including increasing contingency reserves for disasters, improving the tracking of post-disaster spending, and piloting the Caribbean Oceanic and Aquaculture Sustainability Facility (COAST)—an insurance mechanism designed to reduce weather-related risk in the fisheries sector.

Future activities include finalizing a comprehensive inventory of public assets, building and maintaining a loss and damage database, and establishing a source for contingent credit—activities which are being supported by the UK’s Department for International Development. In addition, the EU’s Caribbean Regional Resilience Building Facility is supporting technical assistance in disaster risk financing of adaptive social protection measures. Saint Lucia has established a cross-sectoral working group to oversee the strategy’s roll-out and maximize effectiveness.