A Science policy piece uses Hurricane Melissa to argue that the frameworks rating sovereign debt reward fiscal restraint and barely register whether a country can survive a storm.
Jamaica’s sovereign debt rating was upgraded in the autumn of 2025, the reward for more than a decade of strict fiscal restraint that had brought public debt down substantially. Weeks later Hurricane Melissa arrived.
Damage, losses and costs were estimated at US$12.2 billion — about 56.7 per cent of the country’s 2024 gross domestic product. Jamaica borrowed an estimated US$3.6 billion for recovery, and its debt-to-GDP ratio could rise to around 68.5 per cent.
A piece in Science from researchers at Northeastern University and the Center for Public Enterprise uses that sequence to make a structural argument about how climate-vulnerable countries are assessed.
The authors describe “Jamaica’s trajectory from over a decade of hard-won fiscal discipline to a sharp reversal of that progress” as “an urgent signal that institutional frameworks are not keeping pace.”
The loop
The mechanism they name is self-reinforcing. “Climate-vulnerable countries face a dual challenge: maintaining sustainable public debt while investing in protections,” they write — and the two pull against each other.
Protective investment is expensive and its payoff is the absence of a disaster, which never appears in any account. Fiscal targets are immediate, measurable and rewarded by lenders and rating agencies. A finance ministry choosing between seawalls and a debt ratio is choosing between an invisible benefit and a visible one.
The result the authors describe is “a self-reinforcing cycle in which disasters force underprepared countries to take on additional debt” — and a country carrying more debt has less room to invest in protection, which leaves it more exposed to the next storm, which forces more borrowing.
Their specific claim about the machinery is that credit ratings and debt sustainability frameworks underweight physical climate vulnerability, favouring near-term fiscal targets over preventive investment, and that international lenders reward fiscal discipline more than they reward resilience spending.
Why Jamaica is the example
The case is unusually clean, which is presumably why it was chosen.
Jamaica did the thing it was asked to do. It is frequently cited as a success in sovereign debt consolidation, having run sustained primary surpluses through politically difficult years and brought a debt burden that was among the world’s heaviest down to something manageable. The upgrade weeks before the hurricane is the system certifying that the work had succeeded.
And then a single weather event cost more than half a year’s national output. That figure is the part worth sitting with: 56.7 per cent of GDP is not a setback within a fiscal framework, it is an event the framework has no way to absorb. No plausible rate of debt reduction outruns a shock of that size.
It also illustrates a structural feature of small island economies. A hurricane that crosses a large country damages a fraction of it; one that crosses Jamaica can damage most of it at once, and the diversification that lets bigger economies absorb regional disasters is not available.
What they propose
Three remedies are offered: fold resilience into financial risk assessments, expand rapid disaster financing, and mobilise private capital — the last with the explicit condition that it be done without worsening debt sustainability.
The first is the most consequential and the hardest. Rating agencies do consider climate exposure, but as one input among many and on timescales that match their rating horizons rather than the horizons on which sea levels rise. Making physical vulnerability a first-order term in a sustainability assessment would change which countries are considered creditworthy, in both directions, and the methodological work to do it credibly does not exist.
Rapid disaster financing is further along in practice — catastrophe bonds, contingent credit lines and regional risk pools exist, and Jamaica has used some of them — but the scale is the issue. Instruments that pay out a few hundred million dollars are not addressing a twelve-billion-dollar loss.
The third proposal carries the obvious tension within it. Private capital mobilised for resilience in a low-income country generally arrives as debt or as something debt-like, and the condition that it not worsen debt sustainability is the whole difficulty rather than a caveat on it.
A note on evidence
Co-author Auroop Ganguly of Northeastern raises a problem with the research itself, which is that much of the underlying data is not public.
Key financing terms for Jamaica’s recovery package were still not fully public about a year after the hurricane. Ganguly’s view is that funders and multilateral institutions should treat disclosure of these terms as standard practice.
That is a narrower point than the main argument and possibly a more actionable one. An argument that lending arrangements systematically disadvantage climate-vulnerable countries is difficult to test when the arrangements are confidential, and the case for disclosure does not require anyone to accept the larger thesis first.
It is worth being clear about what this piece is. It appears in Science as a policy argument rather than as a research article — a reading of one country’s experience, with figures drawn from damage estimates and debt projections rather than from an analysis of many countries. The debt-doom loop it describes is a proposed mechanism supported by a case, and the questions it raises about how sovereign risk is assessed are live and contested among economists.
The authors are Aayushi Mishra and Auroop R. Ganguly of Northeastern University, with Advait Arun of the Center for Public Enterprise and Evan Kodra of Northeastern also listed as contacts. The release does not state funding sources.
Notes
- Mishra, A., et al. “Fiscal discipline without physical resilience.” Science, 2026. DOI: 10.1126/science.aeh3608.
- American Association For The Advancement Of Science (AAAS). “How climate disasters trap vulnerable nations in a ‘debt-doom loop’.” EurekAlert!, 22 October 2026. https://www.eurekalert.org/news-releases/1148187.
Credit: NASA