For some countries that did not have access to the IMF’s emergency facilities because of lack of a minimum agreement, the banks were the only resource immediately available. Multilateral and regional development banks, in turn, have all sped up their assistance and disbursements for countries to spend on health and social protection systems, making money arrive faster, among other ways, by approving immediate disbursement projects. As the pandemic and the economic crisis are still unfolding, we are likely to see some of the members of this cohort joining the second tier. Then there is a third cohort of countries with some that are already trying package negotiations, and others that have not so far needed IMF support. Those are clear changes from past practices. It is noteworthy that the IMF agreement with Jamaica accepted a reduction in its primary surplus as a counterpart to higher public social spending. The only possibility is a new roll-over program, which Argentina has already requested.Įcuador has also returned to the IMF after its own debt restructuring with private creditors, while Honduras and Jamaica have recently reached agreements with the Fund. Now it faces renegotiation of its $70 billion debt with multilateral institutions, including $44 billion to the IMF. Argentina just restructured $65 billion in debt held by private creditors. This precautionary lending line was expanded to $107 billion.Ī second category includes countries that were already facing external finance difficulties prior to COVID-19, like Argentina, Ecuador, Honduras, and Jamaica. Mexico, Colombia, and now Chile and Peru are in this category. And GDP declines in the second quarter of 2020 have revealed how strong the impact of COVID-19 has been on the region’s economies.Īs the last-resort liquidity provider, the IMF has so far doubled access to emergency funding, and provided more than $5 billion of total financing to 17 countries in the Caribbean, Central and South America mainly through its Rapid Financing Instrument (RFI).īut when it comes to full-fledged financing deals, one must distinguish between three country categories.Ī first tier includes countries that display strong balance sheets both on fiscal and balance-of-payment dimensions and have access to the Flexible Credit Line facility-designed not to be withdrawn except in extreme circumstances-that serves as positive stamp and a low-cost insurance. Latin America and the Caribbean remains the epicenter of the global pandemic, currently accounting for more than 43 percent of global deaths after a surge in COVID-19 fatalities in Brazil, Mexico, and several other countries in the region.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |