Jamaica after Hurricane Melissa: Building Resilience through Disaster Risk Financing

Jamaica’s economy has been hit by external headwinds over the last 12 months, but the largest shock was Hurricane Melissa (October 28, 2025), the most extreme tropical system to make landfall in the country’s history, with estimated damage and losses of 56.7% of GDP, comparable to Hurricane Gilbert in 1988.
Hurricane Melissa was one of the most devastating storms ever to hit Jamaica, significantly more intense than Gilbert, highlighting the country’s increasing exposure to severe natural hazard events.
In response, Jamaica’s 2022 Disaster Risk Financing (DRF) policy introduced a comprehensive framework to address relief, recovery, and reconstruction across both high-frequency and low-frequency events. The framework is also based on the concept of ‘risk layering’, meaning that different levels of risk are covered by different financial instruments, with each instrument designed to be best suited to the risk it is intended to address. As such, resilience has been built through a comprehensive disaster risk financing strategy.
This framework made available US$662Mn in government resources for immediate recovery, later increased to over US$1.07Bn with International Monetary Fund (IMF) support (US$415Mn in January 2026), helping to address urgent needs such as medical attention, shelters, food security, and restoration of energy, water, and transport.
Additional instruments, including the US$150Mn catastrophe bond (2024–2027), which was fully triggered by Melissa, demonstrate proactive financial preparedness, even though total damages (approximately US$12.2Bn) far exceeded the current available resources of US$1.08Bn.
While recovery will take several years, Jamaica’s strong track record of fiscal management and pre-arranged financing mechanisms have been critical in enabling a rapid response, supporting recovery efforts, and strengthening long-term resilience to extreme natural disasters.

(Source: Inter-American Development Bank)