Latin America received more than 60% of the financial support that the International Monetary Fund (IMF) allocated to countries to face the covid-19 pandemic, the director of the Western Hemisphere Department, Alejandro Werner, said on Monday.
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In an IMF blog, the official highlighted the support of the global lender to the region, in which he anticipated substantial challenges in terms of growth, strengthening of public finances and education.
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“It is important to note that 60% of the financial support that the IMF granted during the pandemic was directed to Latin America“Werner said in a video posted on the IMF website.
He explained that this support materialized through emergency lines and contingent lines, as well as in the extension of some programs, such as the new agreement with Ecuador approved last year after the restructuring of private debt.
Of the $ 110,188 million in IMF assistance to 85 countries to weather the economic impact of the covid-19 pandemic, 68,013 went to 20 Latin American and Caribbean nations, nine of them Caribbean. Werner said the Fund plans to continue supporting the region.
Once vaccination campaigns in the region accelerate and countries develop policy packages to boost growth, the IMF hopes “be able to provide the financial support required for these programs to be implemented“, He said.
RED LIGHT FOR EDUCATION
In its latest “World Economic Outlook” (WEO) report, the IMF improved the outlook for Latin America and the Caribbean, forecasting an increase in growth of 4.6% for this year, a figure of anyway below the global average of 6%. Werner estimated that, given the delays in vaccination campaigns, “maybe the first half of the year is a little less dynamic than we thought.”
And he pointed out that even with growth close to 5%, it would be below the pre-pandemic level given that the contraction of GDP in the region in 2020 was 7%. “The level of per capita income in 2025 is probably similar to what we saw in 2015, which also shows a problem of worsening poverty, of deterioration in income distribution“he warned.
In addition to the challenge of ensuring sustainable and inclusive growth, Werner emphasized the fiscal policies necessary to address the high levels of debt after the pandemic. But above all, it set off the alarms about the educational deterioration in the region as a result of school closings to prevent the spread of covid-19.
“Latin America is one of the regions of the world where the greatest number of classroom days has been lost “and where” access to remote education is quite unequal depending on socioeconomic levels“, he indicated.
“Establishing corrective measures that compensate for the loss in education in the last 14 months will be very important to limit the effects on economic growth, but also on income distribution.“, he stressed.
FROM CORRECTING TO PREVENTING
Werner, a Mexican economist born in Buenos Aires in 1967, announced last month that as of August 31, he will leave his post as head of the IMF’s Western Hemisphere Department, where he arrived in 2013.
Asked about the Fund’s relationship with the region, he said that the movement towards democratic systems in recent decades has contributed to societies with greater transparency and, therefore, with much more debate on public policies. On the other hand, he pointed to changes in the IMF, which went from a macroeconomic stabilization concept to a broader one that includes social indicators.
“This, from the IMF’s point of view, has been reflected through the protection of social spending within the macroeconomic stabilization programs.Werner also emphasized the evolution of the Fund’s tools: from corrective to preventive tools.
“This changes the dynamics in the relationship with our member countries, because it is very different to be part of a preventive risk management strategy, than to be the partner that enters after there is a crisis.“, he pointed.
AFP
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