The Fiscal Implications of Hurricane Strikes in the Caribbean

Tropical storms put considerable strain on the government sector of those countries affected. This has led to, for instance, in the Caribbean, to the creation of the mulit-country insurance pool, the Caribbean Catastrophe Risk Insurance Facility, which can provide some coverage for fiscal shortages to those countries affected. Nevertheless there is still not clear idea to what exact extent countries will suffer shortages in fiscal funds. In this study we compile data and estimate the quantiative impact of hurricanes on fiscal revenue, expenditure and debt for a set of Caribbean countries. Our results whow that total revenue is reduced, but that only current expenditure increases in response to the event, resulting in an overall rise in debt. We also predict that expected losses are likely to differ widely across the region.