Working Paper Series: Special Edition of 2016 to 2018 Interns

The DSA was also done using an average of the historical growth rates in the years of an intense natural disaster for each country. The findings of this corroborates the aforementioned due to the similarity between both results, which indicates that the countries would face difficulties to attain the necessary fiscal surplus. These results can be seen in table 5 of the appendix. 5.2.1 Limitations The DSA is a static tool, therefore, it does not capture the full dynamics of the economies. Therefore, interactions among some key macroeconomic variables that drive debt are not accounted for. Additionally, the DSA uses forward-looking projections over the medium term and therefore there is a margin of error present. 5.2.2 Financing Needs The ability of the countries to finance their needs in the aftermath of disasters is heavily constrained. For example, in the aftermath of the December 2013 floods in St. Vincent and the Grenadines, there was an extreme financing gap where the country only had 2.0 per cent of the finance needed. Additionally, Saint Lucia faced a financing gap of 83.0 per cent after the December 2013 floods. This means that the country had 17 per cent of the finances they needed in the aftermath of the disaster. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) was created in order to ease some of the immediate financing needs of countries post-disaster. CCRIF assists the countries with their short-term cash flow problems when a natural disaster occurs by providing immediate payout to member countries to help finance initial disaster response. All eight ECCU countries are members of CCRIF. The countries also receive funds from other sources to assist them after a weather-related hazard occurs. However, the countries continue to face a wide financing gap.

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