Public Disclosure Authorized GOVERNMENT OF JAMAICA Public Disclosure Authorized The Ministry of Finance and the Public Service Jamaica Catastrophe Bond for Increased Financial Resilience to Natural Disaster and Climate Shocks (P173012) Stakeholder Engagement Plan FINAL 11 JANUARY 2022 Page | 1 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond Stakeholder Engagement Plan A. INTRODUCTION 1. Like many Caribbean countries, Jamaica’s location in the Atlantic Hurricane Belt leaves the country extremely vulnerable to natural disasters of varying intensity and severity. In general, natural hazards pose a significant threat to the small island state of Jamaica, with potentially significant consequences for economic development and poverty reduction efforts. Jamaica is the third most exposed country in the world to multiple hazards, with over 96 percent of the country’s GDP and population at risk from two or more hazards. The country is vulnerable to hurricanes, floods, storm surges, earthquakes, and landslides. High exposure is attributed to the country’s location in the Atlantic Hurricane Belt, the geophysical orientation of its low- lying coastal zones, and its mountainous topography. The Jamaican territory is also crossed by five major fault lines, including the Plantain Garden Fault Zone, which triggered the 2010 Haitian earthquake. 2. Natural disasters in Jamaica: impact livelihoods, destroy crops and homes; destroy infrastructure; undermine businesses; compromise tourism revenues and disrupt the provision of essential services. Such events have significant consequences for economic development and poverty reduction efforts including, but not limited to, reducing foreign exchange reserves, increasing inflation, undermining the country’s fiscal program and reducing the standard of living. Climate change models predict Jamaica could be impacted by an increased frequency of catastrophic natural events due to heightened surface temperatures and global sea level rise. Adverse natural events in Jamaica regularly impact livelihoods, destroy infrastructure, and disrupt the provision of essential services. Thus, the project is expected to bring positive environmental outcomes by expanding the country's disaster risk financing for better disaster preparedness and post-disaster recovery and rehabilitation. 3. Over the years, the country’s financial response to natural disasters has been severely constrained given the current trends in the frequency and intensity of natural disasters. Past financial responses to natural disasters included debt financing and reallocation of budgetary resources to natural disaster-related activities. Those responses often increase the debt burden or have a distortionary impact on the budget and the broader economy, as resources are diverted from other essential expenditure, including investments in social and physical infrastructure. The fiscal costs and efficiency losses associated with a natural disaster highlight the urgency of being proactive in advancing financial preparedness for and financial management post natural disasters. It therefore becomes necessary to develop a disaster risk financing framework to reduce fiscal and financial vulnerability to natural disasters. This is also critical to the efforts of the Government in mitigating and minimizing risks to the country’s macroeconomic stability. Page | 2 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond B. PROJECT DESCRIPTION 4. The project development objective is to expand the Government of Jamaica's financial protection against losses arising from tropical cyclones-wind. The World Bank has approved a US$16.37 million grant from its Global Risk Financing Facility (GRiF), to support the measures being taken by the Government of Jamaica to mitigate disaster risk and strengthen its financial protection against natural disasters. The implementing agency will be the Ministry of Finance and the Public Service (MoFPS). 5. The project will enable the government to expand its portfolio of disaster risk finance (DRF) instruments and its financial preparedness for climate and disaster shocks. The project has one component that will support the Government of Jamaica (GOJ) in designing, structuring and placement of a new risk transfer instrument Catatrophe Bond (CAT Bond). The project will pay the risk premium and transaction costs of the CAT bond, a risk transfer instrument issued by the World Bank through its Treasury for the benefit of Jamaica. Jamaica would enter into an agreement (the “Risk Transfer Agreement”) with the Bank to pass the catastrophe risk of Jamaica. Contemporaneously, the Bank would intermediate the transfer of Jamaica’s catastrophe risk to capital market investors by issuing a CAT bond. It is proposed to implement the Project over a period of two to three years. The duration of project implementation will be dependent on the tenor of the CAT Bond to be finalized based on the CAT modelling exercise, the market sounding and the GoJ. This will be finalized through the project negotiation process. 6. Given the limited focus of the project on the payment of the premium and transaction cost, the project’s environmental and social risk rating is assessed as Low Risk under the World Bank Environmental and Social Policy. The project will not support any physical works or the procurement of goods, therefore project activities are not expected to have any adverse risk and impact on the environment and human health. C. PURPOSE OF THE STAKEHOLDER ENGAGEMENT PLAN 7. The overall objective of this Stakeholder Engagement Plan (SEP) is to define a program for stakeholder engagement, including public information disclosure and consultation, throughout the entire project cycle. Stakeholder engagement requires meaningful two-way dialogue where stakeholders receive information and are given the opportunity to provide feedback. The SEP outlines the ways in which the Ministry of Finance and the Public Service (MoFPS) project team will communicate with stakeholders and includes a mechanism by which stakeholders can provide feedback and raise queries about the project. 8. Engagement, especially from the launch of the Catastrophe Bond will be through timely disclosure of relevant information to raise awareness about the project and its objectives to potential investors and the general public and to create avenues for investors and the public to raise queries and concerns. 9. The scope of this Stakeholder Engagement Plan (SEP) seeks to be proportionate to the nature and scale of the project and its minimal potential risks. Given the nature of the financial Page | 3 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond instrument involved in the project, stakeholder engagement will focus on information disclosure and will occur primarily during to the process of launching /placing the bond. The SEP will be updated, if necessary, throughout the project’s life cycle. Relevant information will be placed on the MoFPS website and various social media platforms. 10. Stakeholder engagement and participation will assist in the process of managing risks of limited uptake by providing timely disclosure of relevant information, gaining stakeholder co-operation and interest. Due to the sensitive elements and details surrounding the proposed Catastrophe Bond (CAT Bond) stakeholder engagement, consultation and information disclosure will primarily be managed by the institution selected to place and manage the Bond during the launch to market the bond to targeted investors. A prospectus providing details of the CAT Bond will be issued by the selected financial institution. The Government of Jamaica, through the Ministry of Finance and Public Service, disclosed relevant information regarding the CAT Bond through its 2021 budget preparation process1 and will continue to do so through various social media platforms (see para. 21 below) leading up to the launch as well as through a post issuance awareness campaign. D. STAKEHOLDER IDENTIFICATION AND ANALYSIS 11. The Stakeholder Engagement Plan (SEP) identifies stakeholders with both primary and secondary interest in the project. Primary stakeholders who have a direct interest and/or involvement in the project include the Ministry of Finance and Public Service and investment institutions in the international capital markets (ICM). 12. Leading up to the launch of the Bond, the SEP will target key investors in the ICM such as hedge fund managers, insurance companies and other relevant investors. The SEP is focused on information disclosure to these stakeholders, including methods through which this information will be disclosed but not limited to: the inclusion of the project in the budget; a virtual roadshow for potential investors preceding the launch; and future social media posts for Jamaican and international stakeholders. PRIMARY – Interested Parties a) Government of Jamaica: The direct beneficiary of the proposed project will be the Ministry of Finance and Public Services which will be the implementing agency for the project and the Government of Jamaica (GoJ). b) International Capital Market (ICM) To buy in and participate in the Bond Offering: - Hedge Fund Managers - Intermediaries - Pension Funds 1 Opening of the 2021-2022 Budget Debate March 9, 2021 “Preparing Jamaica to Recover Stronger”. file:///C:/Users/wb21585/Downloads/mofp-opening-budget-debate-2021-22-with-cover-170321.pdf Page | 4 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond - Investment Bankers - Insurance Companies - Other institutional investors E. SECONDARY – Other Interested Parties 13. Secondary stakeholders include investors in the domestic market, government agencies involved in disaster prevention, risk mitigation and emergency response, members of the public, and other institutions with an interest in the project being considered. Stakeholder engagement will focus on raising awareness within the Domestic Debt Market regarding the features of CAT Bonds. Additionally, the Domestic Debt Market will be updated on the contribution of the CAT Bond to the country’s Disaster Risk Financing strategy. a) Domestic Debt Market. The major players in the domestic debt markets are banks, financial institutions, insurance companies, and mutual funds. The instruments in the market can be broadly categorized as those issued by state/central governments, corporates, banks, and financial institutions. b) Media. The media plays a critical role in the dissemination of information to the public. Accordingly, their role will focus on the disclosure of information on the CAT Bond as a critical Disaster Risk Financing instrument. c) General Public. The aftermath of disasters affects the general public. Information will be disclosed to the public to create awareness of the CAT Bond and its relevance to the Government’s strategy for Disaster Risk Financing. d) Office of Disaster Preparedness and Emergency Management (ODPEM) - operates out of the Ministry of Local Government and Community Development. The role of the agency is to coordinate emergency responses when major events occur. e) National Environment and Planning Agency (NEPA) – falls under the Ministry of Economic Growth and Job Creation as the lead government agency with the mandate for environmental protection, natural resource management, land use and spatial planning in Jamaica. f) National Disaster Committee (NDC) Sub-Committee - Administration, Finance and the Public Service is the main body within the NDC responsible for coordinating the management of the various types of disasters that affect the nation. The NDC is chaired by the Prime Minister. g) Other indirect beneficiaries will include other Caribbean islands and small states who are interested in sponsoring similar financial instruments. These countries will benefit from Jamaica’s experience in issuing its inaugural CAT Bond. Page | 5 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond F. STAKEHOLDER ENGAGEMENT PROGRAM Proposed Strategy for Information Disclosure 14. During his opening budget presentation in March 2020, the Minister with responsibility for Finance outlined a raft of financial instruments under the country’s disaster risk financing strategy, including the proposed CAT Bond. The Ministry of Finance and the Public Service will undertake an ongoing communication campaign to market the CAT Bond. Prior to launch, the MoFPS Debt Management Branch will coordinate key Government entities (Central Bank, Planning Institute of Jamaica) to provide information regarding the launch of the Bond. The design, structuring and placement of the CAT Bond will be primarily handled by the selected financial institution who will disclose the relevant information in targeted global investment markets. 15. The Investor Relations and Communications Manager will lead the communication activities/operations supported by the Ministry’s Communication and Public Relations Unit. MOFPS employs multiple channels of communicating with the public, including Twitter, Facebook and Instagram, public announcements on Print and electronic media. 16. Information disclosure will be done through tailored messages geared toward respective stakeholders and transmitted through several avenues including brochures, prospectus, face- to- face meetings, and Frequently Asked Questions (FAQs). All messages will be produced in the English language2. 17. The information disclosure strategy is detailed in Table 1 below. 2 Any face-to-face meetings for consultations and/or information disclosure will adhere to the national health regulations relating to COVID-19 and the Bank’s Technical Note: Public Consultations and Stakeholder Engagement in WB-supported operations when there are constraints on conducting public meetings March 20, 2020. Page | 6 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond Table 1-Information Disclosure Strategy KEY STAKEHOLDERS DESCRIPTION AND INFORMATION COMMUNICATION TIMING KEY ATTRIBUTES REQUIRED STRATEGY External – Primary International Capital Markets Financial Groups and Details of the Catastrophe Prospectus Prior to launch Intermediaries Bond Virtual social media of bond/ bond Background information on issuance information Disaster Management packages Website link Dedicated feedback email (To be added when financial institution is selected). Secondary Stakeholders Launch and Post execution of Catastrophe Bond National Environment and Government Disaster Risk Stakeholder virtual Planning Agency (NEPA) under Financing Policy meeting the Ministry of Economic Growth and Job Creation and Ministry of Details of project. Frequently Asked Health and Wellness as These Questions (FAQs) How is the bond stakeholders. entities/committees play processed and financed? Brochures After bond Ministry of Local Government a pivotal role in the pre Benefits for the Link on Debt issuance is made and Community Development and post disaster public Office of Disaster Preparedness management with respect general public Management Branch and Emergency Management to planning, preparedness Website What triggers the payments? and disbursement. Dedicated feedback National Disaster Committee email Page | 7 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond KEY STAKEHOLDERS DESCRIPTION AND INFORMATION COMMUNICATION TIMING KEY ATTRIBUTES REQUIRED STRATEGY Ministry of Labour and Social Security Domestic (Secondary Stakeholders) Media The media plays an Government Risk Financing Media interviews important role in Policy MOFPS Social providing an avenue Details of project. Media to disseminate How is the bond -Twitter information to the -Facebook general public processed and financed? -YouTube The Jamaica Benefits for the Dedicated feedback Information Service general public email (JIS) is the GoJ’s What triggers the payments? See para 21 below. communication and After bond information issuance is made machinery public General Public Disaster risk management and financing to ensure their quality of life is not disrupted post- disaster Other Caribbean islands and small Benefit from Jamaica’s Lessons learned Media Throughout states who are interested in experience in pacing its Benefits from data collection project life -Twitter sponsoring similar financial inaugural CAT Bond. and catastrophe risk -Facebook instruments. modelling efforts -YouTube See para 21 below. Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond Page | 8 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond G. RESOURCES AND RESPONSIBILITIES FOR IMPLEMENTING STAKEHOLDER ENGAGEMENT ACTIVITIES 18. The MoFPS Debt Management Branch in the Economic Management Division of the Ministry of Finance and the Public Service has a fully functioning Corporate Communications Department. The Manager, Corporate Communications will monitor the implementation of SEP. There is an in-house social media specialist, who, in consultation with the manager monitors the various platforms and addresses any issues and concerns. H. FEEDBACK AND GRIEVANCE REDRESS MECHANISM 19. A feedback and Grievance Redress Mechanism (GRM) is a system by which stakeholders of a project, or a program can seek information and clarifications about the project and are responded to in a timely manner. The project will maintain a grievance redress mechanism to address questions or concerns. The delivery mechanism will be through the MoFPS external website and social media platforms. Given the nature of the project, it is expected that queries from the public will be for details about the instruments and its functioning. The Corporate Communications Manager will monitor the SEP implementation and respond to any queries through the GRM. 20. During the bond preparation phase, a prospectus is prepared by the lead institution selected to issue the bond on the global markets. Included in the prospectus will be the contact point to whom queries, concerns and additional information should be directed. This feedback and GRM for international stakeholders will be operational once the prospectus document for the CAT Bond is completed and disclosed by the lead financial institution. The lead institution selected to issue and manage the Bond will be the contact point for queries and concerns regarding the prospectus. Secondary Stakeholders 21. The MoFPS Corporate Communications Branch and the DMB Investor Relations and Communications unit will manage this process via the following: - Facebook – Manager Corporate Communications, Ministry of Finance and the Public Service. https://www.facebook.com/MOFJamaica/?pageid=746560758724032&ftentidentifier =2981576658555753&padding=0 - Twitter - @MOFJamaica; - Email – Mofps.pr@mof.gov.jm and invrelinfo@mof.gov.jm. - Telephone: 1(876) 932-4732 - 30 National Heroes Circle, Kingston 4, Jamaica. Page | 9 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond 22. The process for the Feedback and Grievance Redress Mechanism for the project is summarized below. a. The information above on the feedback and GRM will be strategically placed on the MoFPS website project page. b. Queries and/or complaints will be received in writing, telephone or email. All grievances in writing should be addressed to the Manager of Corporate Communications. c. All grievances shall be registered in the grievance log. Contact with the aggrieved party must be within 10 days). d. If there is no resolution within 10 days, the complainant may lodge a complaint with the relevant Deputy Financial Secretary and a response will be provided within fifteen (15) working days. e. Additionally, other grievance systems utilized by the MoFPS are: • The Citizen’s Charter that outlines minimum standards for customer service; and • The Access to Information Act of 2002 that gives citizens and other persons a general legal right to obtain access to an official government document, other than an exempt document, which would otherwise be inaccessible. This can be accessed via the Ministry’s website at www.mof.gov.jm f. Complaints submitted anonymously will be accepted and should be placed in the suggestion boxes conveniently located in the reception area of the Ministry of Finance, 30 National Heroes Circle. 23. Communities and individuals who believe that they are adversely affected by a World Bank supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non- compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service, please visit http://www.worldbank.org/en/projects-operations/products-and- services/grievance-redress- service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. I. Resources Page | 10 Stakeholder Engagement and Information Disclosure Plan – GOJ and WB Catastrophe Bond 24. Minimal resources will be required for the execution of the Plan as majority of the information will be released through social media. The Ministry of Finance and the Public Service (MoFPS) already has an in-house social media specialist, who monitors the various platforms and addresses any issues and concerns. The specialist reports to the Manager, Corporate Communications who develops the messaging for the MoFPS and will be ultimately responsible for oversight of the Feedback and GRM. The bulk of the costs regarding disclosure and reporting to investors will be undertaken by the financial institution selected to place the bond. See Table One below. Table One: Indicative Budget for implementation of the Stakeholder Engagement Plan Activity/Item Additional Cost Release of information regarding the bond at launch and key intervals to $5,000 include development of briefs, statements for posting on social media and 1. local and international platforms. 2. Funding of the Social Media Specialist (Existing Staff) 0 3. Funding of Manager, Corporate Communications (Existing Staff) 0 $5,000 J. MONITORING AND REPORTING 25. Once the bond is issued, the MoFPS will periodically disclose information, as needed, through media briefings, statements to parliament, feeds from its various media channels, press conferences and its social media platforms. This aspect will be overseen by the Manager, Corporate Communications, Ministry of Finance and the Public Service. In addition, the Government will be required to provide an annual report on the project activities, including implementation of the SEP. 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