The Government of Mexico guarantees that it has financing and activate two funds for more than 600 million dollars (about 568 million euros) to address the damage left by Hurricane Otis, which caused 27 dead after impacting as category 5 in Acapulco, Guerrero, one of the main tourist destinations in the country, Gabriel Yorio, undersecretary of Finance and Public Credit, reported this Thursday.
“The Ministry of Finance has always maintained each year the financing strategy to cover this type of eventuality. Parametric insurance, catastrophic bonds, which very high probability They are going to be activated,” he said within the framework of his participation in the National Financial Education Week (SNEF).
Catastrophe bonus
Since Wednesday, when Hurricane Otis hit, the Secretariat of Finance and Public Credit (SHCP) reported a catastrophe bond with coverage of up to 485 million dollars, while this day the Mexican official indicated that parametric insurance will also be activated.
This second financing instrument It could support with up to 5,000 million pesos (about 275 million dollars) and is valid until July 5, 2024, while the catastrophe bonus will be valid until March 2024.
In his presentation at the 16th edition of the SNEF, Yorio also explained that deductibles are applied to sectors such as road, educational, housing, healthamong others, while the catastrophic bonus is against losses derived from earthquakes and tropical cyclones.
In this sense, Yorio assured that the resources are available in the Mexican treasury and ready to be used in the emergency due to the impact of Otis in Guerrero.
“It is additional to the provisional budget lines to address this type of disaster. We have the financing in the treasury and obviously it will be used to face the contingency that we are experiencing in Guerrero,” he indicated.
Natural Disaster Fund
Yorio has stated that the resources of the Fund for Natural Disasters (Fonden) did not disappear with the elimination of 109 trusts in December 2020 and revealed that it has up to 18,000 million pesos (992 million dollars), an amount less than the more than 32,300 million pesos (1,780 million dollars) that it had in 2018, at the beginning of the present public Administration.
Businessmen in the tourism sector and the governor of Guerrero, Evelyn Salgado, have estimated an impact of 80% of businesses and hotels, although the damage in the Acapulco resort has not been quantified.