Latin America and the Caribbean is the most indebted developing region due to the economic and health crisis caused by the COVID-19 pandemic, according to a report by the Economic Commission for Latin America and the Caribbean (ECLAC). The document shows that the region’s indebtedness increased from 68.9% in 2019 to 79.3% in 2020.
The report points out that the financing needs of developing countries reach $ 2.5 trillion, which exceeds the lending capacity of the International Monetary Fund (IMF).
According to ECLAC, most of the IMF’s emergency loans due to the pandemic were earmarked for 21 countries in Latin America and the Caribbean. In January 2021, the IMF allocated about $ 66.5 billion to the region, which represents 63% of the $ 106 billion that was transferred to 85 developing economies.
“In all the region’s countries, without exception, the fiscal situation has deteriorated and general government debt levels have increased,” says ECLAC’s executive secretary Alicia Bárcena during the presentation of the document.
The report also states that in the current context of the pandemic, financing for development has two short-term challenges: the expansion of public health expenditures and sustaining the consumption of individuals and families, requiring temporary measures to maintain income, such as the emergency aid paid by the Brazilian Federal Government.
As this type of measure is not sustained in the medium and long term, ECLAC points to the need for public policies for job creation, requiring public expenditures to boost production and economic recovery.