Americas

Latin America faces both the pandemic and its economic consequences

The first case of COVID-19 in Latin America and the Caribbean was confirmed in Brazil on February 26. A little more than a month later, there are thousands of infections. The coronavirus is spreading in our region’s countries, and governments are rushing to take emergency measures in an effort to contain the pandemic.

So far, the response has been similar in each country: border closures, social isolation, emergency medical care, awareness campaigns, and support for the poorest families. Huge efforts are being made. But the crisis is hitting states with limited financial, physical, and professional resources. And it appears that we are only in the initial stage of a battle that will be long and expensive.

At the World Bank, we are committed to help countries quickly and effectively mitigate the negative impacts of the virus.  Globally, a $14 billion fund was approved a few days ago to assist developing countries. Some of this financing will be used to shore up the economies of Latin America and the Caribbean so they can return to growth as soon as possible.

We are working with the region’s governments by providing resources, public policy assistance, and technical advice. We know that the poorest countries will suffer most from the pandemic. As strategic development partners, our role is stand by them, now more than ever.

With this goal, the World Bank’s executive board approved this Thursday the first deployment of funds, which includes almost $100 million to four countries in Latin America and the Caribbean . In parallel, we have redirected $170 million from operating funds already in progress to help combat the coronavirus.

To address the most urgent needs from the pandemic, Argentina will receive $35 million, while Ecuador, Haiti, and Paraguay will each receive $20 million from the Bank’s immediate response program . We have also allocated $20 million from our operation in Bolivia’s health sector to help the country acquire respirators, one of the critical medical supplies in treating COVID-19. In the Dominican Republic, $150 million from a contingent operation to address natural disasters (including pandemics) will help implement emergency measures to contain the spread of the virus. Panama will receive $41 million from a similar loan.

The health needs created by this emergency are enormous. The list includes laboratory and monitoring equipment to prevent infections, as well as basic supplies such as gloves, masks, and ventilators.  There are also infrastructure needs, such as drastically increasing the number of intensive care rooms in hospitals and setting up quarantine centers.

This is only the first stage of our response to the needs across the region. We are in talks with other governments, and a second group of countries is expected to receive funds in the coming weeks.  And as we take these first steps to handle the health emergency, we are already thinking about the next phase, in which we will have to deal with the social and economic impact of the crisis. The needs will be immense in the medium and long term. The region was already in an uncertain economic situation, and the new scenario will require much stronger macroeconomic responses than had been imagined. We have not yet begun to see the full scope of what is happening, nor what the impact of the coronavirus will be on the poorest people and the most unprotected sectors.

Family incomes, employment, food security, the success of crucial sectors of the economy, and the health of public accounts depend to a large extent on production, investment, and consumption not stopping—or at least suffering as little as possible. For this to happen, large and small companies must have working capital, and the chain of payments and the supply of essential goods must not be cut. But we must remember through all of these challenges that the poorest people and informal workers are the most vulnerable. This makes it essential to reinforce countries’ social welfare systems to absorb the shock.

We must move quickly to address this crisis, and our response must be effective and flexible, adapted to the distinct needs of each country.   Apart from the health sector, these needs may be in power infrastructure, the provision of broadband internet, or the distribution of school lunches. These are just some of the needs that will be essential to address as countries weather this crisis.

The World Bank’s commitment is clear. We will work together with the countries in the region and help  them get through a difficult time that is causing so much distress. People must be given hope, but that hope must be fed with actions. We must unleash a vibrant wave of solidarity through communities across the region. It is crucial that we help provide the physical resources, management capacity, and knowledge to address and overcome this crisis, so that countries can soon get back on a path to growth and prosperity for all their people.

Source: World Bank

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