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Friday, June 09, 2006 

Caribbean Development Fund major issue at COFAP Meeting

in Barbados (184/2006)

BASSETERRE, ST. KITTS, JUNE 8th 2006 (CUOPM) – Operationalising the CARICOM Development Fund is the major issue on the agenda for the Fourth Special Meeting of the Council for Finance and Planning (COFAP) in Barbados on Friday.

The OECS countries have called for the establishment of the Regional Development Fund to assist them to overcome any economic difficulties their participation in the Caribbean Single Market and Economy (CSME) may have on their individual economies.

St. Kitts and Nevis’ Prime Minister and Minister of Finance, Hon. Dr. Denzil L. Douglas, will chair the COFAP Meeting to be held at the Headquarters of the Caribbean Development Bank on Friday afternoon.

The meeting is aimed at finalising the outstanding issues surrounding the operationalisation of the Fund, which according to Dr. Douglas, is critical for the disadvantaged countries in the OECS.

“It is critical, if we are to move forward in terms of preparing for the transition and transformation of those economies and sectors that would have become disadvantaged in accessing membership of the CSME, that the funds be there to help us through that period,” said Prime Minister Douglas in an earlier statement.

The Regional Development Fund is identified in the Revised Treaty of Chaguaramas establishing the CARICOM Single Market and Economy (CSME) and is intended to provide financial or technical assistance to those countries, regions and sectors which are determined to be adversely affected by the operation of the single market.

The revised treaty defines a disadvantaged country as those in the Organisation of Eastern Caribbean States (OECS) and Belize which have all been classified as Less Developed Countries (LDC).

Member states that may require special support measures of a transitional or temporary nature due to: natural disasters; the adverse impact of the CSME on their economies; and temporarily low levels of economic development or have been designated a Highly-Indebted Poor Country (HIPIC) have also been included in the category of Disadvantaged Countries. Another agenda item is the Caribbean Catastrophe Insurance Risk Initiative, which was proposed because of the concerns among CARICOM governments about the increasing difficulty in gaining access to affordable and effective re-insurance coverage because of the high risk of hurricane damage in the region.

A feasibility study of the project, expected to cost the region US$100 million to set up is now underway in the region.

The initiative will allow countries of the region to lower the cost of insurance by pooling risks, and provide them with immediate liquidity in the event of a disaster; allow access to additional risk capital through reinsurance or issuance of financial coverage instruments, such as catastrophe bonds; and process claims based on the measurement of the intensity of a predefined natural event in a predefined area over a predefined period, and limited to a predetermined sum per year.

This approach makes it less expensive than traditional insurance since it does not require that the insurer to evaluate losses on an indemnity basis.

In addition, the insured countries would pay an annual premium, based on their own specific exposure. This risk would be calculated using probability risk modelling techniques and would be specific to each state's location and size.

Ministers and delegates will also discuss issues ahead of the next meeting of Caribbean Heads of Government in St. Kitts in July.Photo of Caribbean leaders

Copyright © 2005 By The Government Of St. Christopher (St. Kitts) & Nevis

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