RTC Director

BAHAMAS Government defends decision to use dormant accounts

The Bahamas government is defending its decision to table legislation aimed at transferring funds from dormant accounts to the Disaster Emergency Fund saying that conservative estimates suggest that over 40 per cent of the country’s national debt exists because of climate change.

Prime Minister Phillip Davis told legislators that what’s needed today, more than ever, are innovative, strategic, and sustainable solutions taking on the most pressing climate-related challenges to create opportunities for a more resilient and prosperous future.

“And that is why we are here today. One of the things we have learned is that disaster preparation, and the funding and infrastructure that supports it, must be proactive. It must be sustained, and it must also be robust enough to account for the threats we face.”

Davis said that the resolution currently before the Parliament seeks to ensure that when disasters strike, the government has the financial capacity to respond swiftly, effectively, and equitably.

“In decades past, disaster management in The Bahamas was, unfortunately, reactive, focused mainly on disaster emergency response in the aftermath of a storm,” he said, noting that the passage of Hurricane Dorian on September 1, 2019 “laid bare how woefully unprepared we were for this era of more frequent and more intense storms.

“We cannot allow the flawed response and recovery mechanisms that were exposed by Dorian to be repeated. This is why, in recent years, this administration has transformed our approach from managing disaster responses to managing disaster risk.”

He said the establishment of the Disaster Risk Management Authority (DRMA) represents a fundamental shift in mindset with the focus being on risk reduction, mitigation, preparedness, and recovery.

“We are focused on building resilience before the storm and then rebuilding stronger after it.

The passage of the Disaster Risk Management Act, 2022, was a turning point. It provided the legal foundation for a comprehensive, structured, and accountable disaster management system,” Davis said.

He said this change necessitated a new model for funding disaster-related efforts and that the new strattegy was prepared by the Ministry of Finance in consultation with the DRM Authority and supported by the Inter-American Development Bank (IDB).

“It is a practical, evidence-based, best practice-aligned plan that funds every stage of our disaster risk management cycle. We are funding risk analysis, which allows us to know the extent of the risks we are facing. We are funding risk reduction, so we can take decisive, proactive action to minimise damage before it occurs.”

Davis said the strategy was developed by experts using advanced risk analyses and post-disaster risk assessments to identify our risk profile, quantify potential losses, and enhance our financing capacity, ensuring that our mitigation and response mechanisms are adaptive and resilient.

”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, adding “that is the scale of damage the government must be prepared to face from a disaster”.

He said the strategy recommends a layered approach such as a blend of investments, insurance, and reserves to diversify risk and reduce fiscal pressure.

Prime Minister Davis said that the resolution beforethe Parliament represents another important step forward toward funding the country’s disaster risk management efforts.

He said under Section 19 of the Disaster Risk Management Act, the Disaster Emergency Fund must be maintained and used to finance response, rehabilitation, recovery, and financial protection instruments.

Prime Minster Davis said the experts have determined that this Fund should hold a minimum of US$17 million to ensure adequate liquidity following a severe natural disaster.

“This resolution authorises the transfer of US$17 million from the dormant account proceeds held by the Treasurer, which are now part of the Consolidated Fund, into the Disaster Emergency Fund.

“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,” Davis said, noting that currently, regulations and operating procedures are being developed to ensure the efficient and effective management of these funds.

He said the regulations will clearly outline what the funds can be used for, how unused funds can be invested to grow the fund, what will activate their use, and the appropriate steps that must be taken to ensure accountability.

Davis said that these funds ensure that when disaster strikes, the government can mobilise immediate assistance without delays or dependence on external financing.

“By capitalizing 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.

“We cannot prevent storms from forming. But we can strengthen our nation’s capacity to withstand and recover from them,” Davis said, adding “that is what today is about”.

Source-CMC

by RTC Director