The Tribune

• Twin crises cost country $13.1bn in loss and damages

• IDB doubles Bahamas’ emergency financing to $200m

• Nassau’s flood prone areas to expand by 8% by 2050

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Inter-American Development Bank (IDB) has approved doubling its crisis financing facility for The Bahamas to $200m after combined Dorian and COVID losses matched this nation’s annual economic output.

Documents seen by Tribune Business show the multilateral lender’s executive directors on December 7, 2023, agreed to increase this nation’s contingent credit facility (CCF) by 100 percent from the original $100m to enable it to cope with health-related pandemics as well as catastrophic hurricanes.

Accompanying reports revealed that The Bahamas is estimated to have suffered $13.1bn in total losses as a result of Dorian and the pandemic, a sum that is almost equal to the $13.526bn economic output - or gross domestic product (GDP) - this country is forecast to generate during the current 2023-2024 fiscal year.

And, further illustrating The Bahamas’ need to have financing available to meet the demands of future emergencies, the IDB report said hurricane-related catastrophes have inflicted more than $6.7bn in total damages over the two decades between 2002 and 2022, with that figure exceeding more than 50 percent of this nation’s 2021 GDP.

As for COVID-19, the IDB revealed that the pandemic has been responsible for 844 deaths in The Bahamas through to July 12, 2023, with some 38,000 persons - almost one in every ten residents - having been infected by the virus over a three-and-a-half year period. Government’s “extraordinary” spending to combat COVID is close to half a billion dollars, standing at around $465m at end-June 2023.

The Government used $80m of the original $100m crisis financing facility to address “the humanitarian crisis” created by Hurricane Dorian in Grand Bahama and Abaco and, with its full replenishment approved back in August, the IDB has now moved to grant the Government’s request that it be doubled to $200m.

“In response to the COVID-19 pandemic, in May 2020 the bank approved a new expansion of the CCF to include public health risks,” the IDB confirmed.

“In this context, due to the country’s high exposure and vulnerability to public health events, the Government requested the bank to modify the contingent loan to increase the total loan amount by an additional $100m.... to a total of $200m in order to incorporate coverage for public health risks.”

Justifying the expanded emergency financing, the IDB pointed to The Bahamas’ long-standing vulnerability to hurricane-related natural disasters, with storms only set to increase in severity and frequency due to the impact of climate change. “In the past 50 years, 20 hurricanes have hit the territory of The Bahamas,” its report said.

“Just in the past seven years, three major (Category 4 and 5) hurricanes have made passage through the country. Hurricane Matthew, in 2016, which greatly impacted the country’s major population centres in New Providence and Grand Bahama, as well as the district of North Andros, causing damage and losses of $519m.

“Hurricane Irma, in 2017, that affected the provision of basic services in Grand Bahama, and which caused damage in Ragged Island, Acklins, Inagua and Bimini, with an estimated total damage and losses of $118m.

“Hurricane Dorian, in 2019, affected approximately 29,472 persons in Abaco and Grand Bahama, surpassing the loss and damages of previous hurricanes Joaquin, Matthew and Irma combined and caused an estimated damage and losses of close to $3.2bn. Total damage from disasters in The Bahamas from 2002 to 2022 (over $6.7bn) is equivalent to more than 50 percent of the country’s economy in 2021.”

Hurricane Dorian’s devastation, when added to the estimated $9.5bn losses inflicted by COVID-19 between 2020 and 2023, means the two catastrophic events caused combined damages that are virtually equal to the Bahamian economy’s total output for the 2023-2024 fiscal year.

“The Bahamas’ exposure to public health risks is evidenced mostly by the impact of the COVID-19 pandemic, which caused 844 deaths and 38,000 confirmed cases as of July 12, 2023, but also by other epidemic outbreaks of vector-borne diseases like dengue, which in 2011 registered more than 3,500 cases, and chikungunya that reached around 800 cases in 2014,” the IDB report added.

“Additionally, the country is highly exposed to infectious disease outbreaks in the aftermath of severe natural disasters like tropical cyclones. The potential economic impact of public health emergencies is high. National losses due to COVID-19 for the period 2020-2023 were estimated at $9.5bn.

“Although there was no infrastructure destruction, this cost was 2.7 times that of damages and losses due to Hurricane Dorian. Furthermore, the International Monetary Fund (IMF) estimated that the overall extraordinary public expenses to address the pandemic reached approximately $450m between 2020 and 2022.” The latter figure has now advanced slightly higher to just below $470m.

Illustrating just why The Bahamas needs instant access to emergency funding in the wake of disasters, the IDB report added: “The country’s vulnerability to natural disasters and the potential of public health emergencies, under the current macroeconomic juncture, highlight the importance of implementing measures that can help increase The Bahamas’ economic and fiscal resilience to disaster risk.

“The two recent emergencies caused by external shocks, Hurricane Dorian and the pandemic, are estimated to have cost the country $13.1bn.” It also warned that climate change will increase flood-exposed areas in Nassau by 8 percent over the next quarter-century to 2050.

“Disaster risk in the country is considered high due mainly to socioeconomic factors, such as the location of communities and infrastructure, mostly in coastal areas,” the IDB said. “These trends are likely to worsen because of climate change.

“With most of its territory a few metres above mean sea level, The Bahamas is highly vulnerable to sea level rise and storm surge associated with increasing intensity of extreme weather events due to the impacts of climate change. Likely impacts include coastal flooding and erosion, mangrove retreat, decreased seagrass bed productivity and saltwater intrusion into existing small lenses of fresh groundwater.

“A study conducted by the IDB indicates that the probable flood exposed area in Nassau will expand 8 percent by 2050 due to the increasing precipitation caused by climate change. The Government of The Bahamas recognises the need to strengthen measures to adequately address the impacts of climate change, based on lessons learned from past events, such as the extensive damage caused by Dorian....

“The new Disaster Risk Management Act of December 2022 fully incorporates climate change issues, stating that its purpose is to develop, promote and implement a disaster risk management approach that is, holistic, comprehensive, integrated and proactive in mitigating the socioeconomic and environmental impacts of disasters, including climate change.”