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Caribbean, Latin America Lost $1 Billion Due To COVID-19 Pandemic, ECLAC Says

SANTIAGO, Chile — Latin America and the Caribbean received US$105.48 billion in Foreign Direct Investment, FDI, in 2020 – 34.7 percent less than in 2019, 51 percent less than the record high achieved in 2012, and the lowest since 2010, the Economic Commission for Latin America and the Caribbean (ECLAC) indicated during the presentation of the annual “Foreign Direct Investment in Latin America and the Caribbean, 2021”

Globally, FDI dropped by 35 percent in 2020 to approximately $1 trillion dollars, which represents the lowest since 2005. Latin America and the Caribbean have experienced a downward trend since 2013, which has spotlighted the relationship between FDI flows and commodity price cycles, mainly in South America, according to comments on the report from Alicia Bárcena, the UN’s regional organization Executive Secretary.

The report suggests that in the current international context, global FDI flows will recover slowly, and the search for assets in sectors considered strategic for international recovery, and plans to transform the productive structure (in such fields as infrastructure, the health industry, digital economy), indicates most of these operations will be centered in Europe, North America and some countries in Asia.

For Latin America and the Caribbean, FDI projects experienced a rebound between September 2020 and February 2021. However from that month to May 2021, it appears that a new drop occurred. “In this scenario, it is difficult to imagine FDI inflows into the region could increase by more than 5% in 2021,” ECLAC’s report states.

“FDI has made relevant contributions in Latin America and the Caribbean, but there are no elements indicating that in the last decade it has contributed to significant changes in the region’s productive structure or that it has served as a catalyst for transforming the productive development model. Today, the challenge is greater due to the characteristics and magnitude of the economic and health crisis. We need to channel FDI towards activities that generate greater productivity, innovation and technology,” Alicia Bárcena said.

Eight strategic sectors to drive a big push for sustainability in the region have been identified. These sectors – which could be bolstered by FDI – are the transition to renewable energy; sustainable electro-mobility in cities; an inclusive digital revolution; health-care industry; the bio-economy; the care economy; the circular economy; and sustainable tourism.

The report indicates that FDI increased in only five of the region’s countries in 2020: the Bahamas and Barbados in the Caribbean; Ecuador and Paraguay in South America; and Mexico, which is the second-biggest recipient in the region after Brazil. The natural resources and manufacturing sectors, with declines of 47% and 38%, respectively, were the hardest hit in 2020. Renewable energy held steady as the sector in the region that sparks the most interest among foreign investors.

In 2020, the United States increased its participation in the region’s FDI from 27% to 37%, amid a sharp decline for Europe (which fell from 51% to 38%) and Latin America (which went from 10% to 6%). “The smaller decline of the United States as a source of FDI is due mainly to the increase in that country’s investments in Brazil in 2020. In contrast, the inflows from the two European countries that had the most investments in Brazil – the Netherlands and Luxembourg – fell between 2020 and 2019, which led to Europe having less weight as an investor,” the document states.

In 2020, the flows of Latin American transnational enterprises (known as trans-Latins) also plunged (73%), although with a sharp diversity: Chile and Mexico showed an increase in FDI flows abroad, but Argentina, Brazil, Colombia and Panama recorded setbacks.

“In addition to maintaining emergency aid for the most vulnerable sectors of the population and smaller companies, the region’s countries should set in motion strategic plans both for reactivation and the transformation of production. Governments and the private sector should use their capacities so that the policy for attracting foreign capital becomes part of industrial policy and as an instrument for transforming the productive structure,” Bárcena emphasized.

Another chapter of the report, “Chinese investment in a changing world: repercussions for the region,” states that “Latin America and the Caribbean’s process for recovering from the COVID-19 pandemic is an opportunity to start a new phase in its economic relations with China and to develop policies to ensure that investments from Beijing contribute to building productive capacities in receiving countries, creating jobs and promoting sustainable development. Multilateralism must be part of this strategic approach.”

As to “Investment strategies in the digital age,” the model displayed includes three dimensions (connected economy, digital economy and digitized economy) and addresses numerous challenges related to inclusion, innovation, regulation and taxation, among other issues.

“FDI can contribute to the digital transformation in Latin America and the Caribbean, but if the structural characteristics of the region’s economies are not taken into account or remain unchanged, digitalization could widen existing gaps and produce greater exclusion and distributive inequality”, concludes the annual report.

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Income Level Alone Should Not Determine How Much Benefit Aid A Country Receives: OP-ED Piece

SANTIAGO, Chile — The recent call to action by the Secretary of the Treasury of the United States, Janet Yellen, to the G-20 for a new issue of IMF Special Drawing Rights (SDRs), which the G-20 recently approved, and the re-allocation of excess SDRs to low-income countries (LICs) is a much welcome and needed initiative. Concerted international action and solidarity are the only means to confront and overcome the COVID-19 crisis.

A truly multilateral and global response to the Pandemic must extend the benefits of this initiative to all developing countries, irrespective of their level of income, including to middle-income countries (MICs). MICs represent 75% of the world’s population, and roughly 30% of global aggregate demand. More importantly, MICs account for 96% of developing country public debt (excluding China and India). Their success in confronting COVID-19 is central for global recovery and financial stability.

Developing countries have, without doubt, borne the brunt of the social and economic impact of the current crisis. The increases in poverty and extreme poverty rates, the number job losses and declines in per capital income have been unprecedented. These impacts are not only concentrated in LICs, but also affect MICs.

Latin America and the Caribbean (LAC) has been the most impacted region in the world in terms of real GDP contraction (-7.7% for 2020). This has been accompanied by the closure of more than 2.7 million firms, and the rise in number of jobless persons to 44.1 million, and in the number of people living in poverty from 185.5 to 209 million people, reaching 33.7% of the total population. Extreme poverty has increased by 8 million, to 78 million people. By the end of 2020 the level of per capita GDP equaled that of 2010 (ECLAC, 2020); another “lost decade” by any measure.

The effects of the pandemic and the policies implemented in response have increased the liquidity needs of developing countries, including those of LAC. At the same time, fiscal emergency measures to contain the decline in output have led to rising debt levels which -if not carefully monitored- may jeopardize the recovery and countries’ capacity to build forward better.

LAC is the most indebted region in the developing world. The debt of the general government in 2020 reached 79.3 percent of GDP and the external debt service stood at 57 percent relative to exports of goods and services (IMF, 2020). In contrast to developed economies, LAC -as the rest of developing economies- face enormous obstacle to create the policy space to substantially increase their debt levels without jeopardizing their credit ratings, exchange rate stability, or even their international reserve positions.

The bulk of the global counter-cyclical monetary and fiscal measures to combat the Pandemic -amounting US$12 and US$ 7 trillion dollars in 2020 (24% of world GDP)- were implemented by developed countries.

A new and significant issue and reallocation of SDRs is the most effective and expedient manner to guarantee enough liquidity for developing economies, and provide the required policy

space to confront the effects of the pandemic. Linking the creation of new international resources with financial transfers to developing countries to attend their development requirements is a long-standing demand. Now it is more relevant than ever; indispensable for placing the Sustainable Development Goals, within developing countries’ reach.

Access to SDRs is an indefeasible right of all IMF members. SDRs do not generate additional debt nor do they require conditionalities. Also, they are not subject to the fastidious negotiations of quota increases or borrowing arrangements. A new SDR issue would strengthen the IMF’s “fire power” (currently at roughly US$ 800 billion dollars, a third of the estimated financing needs of developing countries) and provide greater incentive for all countries to participate in this initiative: IMF’s financial support for COVID-19 represents barely 12% of its lending capacity.

A new issue of 500 billion SDR (requiring the approval of 85% of the voting power of IMF board of governors) would generate que equivalent of US$56 billion dollars in additional reserves for Latin American and Caribbean countries. This would benefit some of the most indebted economies in the region.

Since any new issue of SDRs would be allocated mainly to developed countries (roughly 60% of the total) a mechanism must be put in place for the voluntary reallocation of excess SDRs from developed to developing countries. A mechanism to pool SDRs within the existing multilateral facilities and their reallocation to strengthen the financial capacity of Regional Financial Arrangements (RFAs) and other regional financial institutions should receive serious consideration as a means to increase liquidity and put SDRs at the service of economic and social development.

Alicia Bárcena is the Executive Secretary of the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC)

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Caribbean Will See Positive Growth In 2021, But Not Return To Pre-Pandemic Levels of Economic Activity

SANTIAGO, Chile — The Latin America and the Caribbean region will experience a contraction of -7.7 percent in 2020 but will have a positive growth rate of 3.7 percent in 2021, due mainly to a statistical rebound that will nonetheless be insufficient for recovering the economic activity levels seen prior to the coronavirus pandemic (in 2019), ECLAC indicated today in a new report.

ECLAC released its Preliminary Overview of the Economies of Latin America and the Caribbean 2020 — one of the United Nations organization’s flagship annual reports — during a virtual press conference given by its Executive Secretary, Alicia Bárcena.

According to the document by the Economic Commission for Latin America and the Caribbean (ECLAC), in a context of global contraction, Latin America and the Caribbean is the region in the developing world that has been hardest hit by the crisis stemming from COVID-19.

Caribbean Will See Positive Growth In 2021, But Not Return To Pre-Pandemic Levels of Economic Activity

In the decade prior to the pandemic, the region was on a low-growth trajectory, and in 2020 it faces an unprecedented combination of negative supply and demand shocks, which is translating into the worst economic crisis in the last 120 years.

Although the significant fiscal and monetary efforts made by countries have served to mitigate the effects of the crisis, the pandemic’s economic and social consequences have been exacerbated by the structural problems that the region has suffered historically. In 2021, ECLAC foresees a positive GDP growth rate that will fundamentally reflect a statistical rebound, but the process of recovering pre-crisis levels of Gross Domestic Product (GDP) will be slow and will not conclude until 2024.

“The growth dynamic in 2021 is subject to high uncertainty related to the risk of renewed outbreaks of the pandemic, the agility with which vaccines are produced and distributed, and the capacity to maintain fiscal and monetary stimulus to support aggregate demand and productive sectors. Making progress on sustainable and inclusive growth necessitates a productive transformation towards environmentally sustainable sectors, which would favor job creation and technological innovation,” Alicia Bárcena stated.

Caribbean Will See Positive Growth In 2021, But Not Return To Pre-Pandemic Levels of Economic Activity
Marigot Bay in French Saint Martin

The region’s weaknesses and structural gaps, its narrow fiscal space, inequality, limited coverage and access to social protection, elevated labor informality, productive heterogeneity and low productivity are central to understanding the extent of the pandemic’s effects on the region’s economies, their difficulties for implementing policies that would mitigate those effects, and the challenges they face in undertaking a sustainable and inclusive economic reactivation.

Before the pandemic, the region already had low economic growth: 0.3% on average in the 2014-2019 period, with a 0.1% rate notched in 2019. With the arrival of the pandemic, this low economic growth was compounded by negative external shocks and the need to implement policies aimed at confinement, physical distancing and the suspension of productive activities, which meant that the health emergency ended up prompting the worst economic, social and productive crisis that the region has ever lived through. The contraction in economic activity has been accompanied by a significant rise in the unemployment rate, which is forecast at around 10.7% in 2020; a steep fall in labor participation; and a considerable increase in poverty and inequality.

According to the projections released by the United Nations organization, South America is seen contracting by -7.3% in 2020 and growing by 3.7% in 2021; growth in Central America is expected to shrink by -6.5% in the current period and expand by 3.8% next year; while the Caribbean is seen contracting by -7.9% in 2020 and growing by 4.2% in 2021.

Caribbean Will See Positive Growth In 2021, But Not Return To Pre-Pandemic Levels of Economic Activity

ECLAC’s document emphasizes that to keep the region from perpetuating its low-growth dynamic, expansionary fiscal and monetary policies are needed along with environmental and industrial policies, all of which would enable the structural transformations that the region requires and would promote sustainable development.

It also poses the need to prioritize spending on the economic and social reactivation and transformation by fostering employment-intensive and environmentally sustainable investment in strategic sectors; to extend the basic income to people living in situations of poverty; provide financing to Micro, Small and Medium-sized Enterprises (MSMEs); offer incentives for productive development, the digital revolution for sustainability and clean technologies; and universalize social protection systems.

The report contends that beyond national efforts, the region’s economic reactivation and transformation will require financing and international cooperation. In this area, it stresses the need to utilize instruments such as the issuance and reallocation of the International Monetary Fund’s Special Drawing Rights (SDRs) to strengthen the reserves of the region’s countries and regional agreements; include vulnerable middle-income countries in the G20’s debt moratorium initiative (DSSI) and also set in motion the debt for climate change adaptation swap in the case of the Caribbean, along with the creation of a resilience fund; and capitalize multilateral, regional and national credit institutions.

https://www.royalcaribbeanblog.com/2020/10/09/where-and-when-will-you-have-wear-mask-royal-caribbean-cruise

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Webinar Tuesday To Discuss Active Role Of Caribbean In Halting Spread of COVID-19

ST. AUGUSTINE, Trinidad and Tobago — With the active policy shift from COVID-19-driven responses to post-COVID-19 recovery, the debate now is over what comes next for the Caribbean and the role of partnerships. For the Caribbean region, the United Nations (UN) remains a vital channel of support for the region.

It is in this context that The UWI St. Augustine’s Diplomatic Academy of the Caribbean (DAOC) will host a webinar on December 15 titled: “The Caribbean and Post-COVID-19 Recovery: The Role of the United Nations in the Context of the 2030 Agenda for Sustainable Development.”

The webinar, which will be held via Zoom web conference, centers around four related themes: (i) the fallout from the COVID-19 pandemic and the implications for the Caribbean’s ability to advance on the 2030 Agenda for Sustainable Development, a 15-year plan to achieve the 17 Sustainable Development Goals (SDGs) that UN Member States signed off on in 2015; (ii) the Agenda 2030-related opportunities to “build back better,” taking account of COVID-19-related setbacks; (iii) UN programming/partnership (re-)calibrations in the region in the age of COVID-19, against the backdrop of the Decade of Action; and (iv) the Caribbean’s post COVID-19 recovery planning/policy trajectory.  

“This DAOC-hosted webinar represents an opportunity to contribute to framing of the unfolding Caribbean post-COVID-19 recovery narrative through the UN lens. The nature of the COVID-19 crisis has elicited renewed interest in the importance of multilateralism, the UN’s 75th anniversary also spurring wider debates on same,” said DAOC Manager Nand C. Bardouille.

This upcoming webinar, which will be moderated by Bardouille, features three panelists: Safiya Horne-Bique, Director of Trade and Sustainable Development, Association of Caribbean States (ACS) Secretariat; Srdan Deric, RCO Team Leader, United Nations Country Team (UNCT) Trinidad and Tobago, Aruba, Curacao and Sint Maarten; and Abdullahi Abdulkadri, Coordinator, Statistics and Social Development Unit, Economic Commission for Latin America and the Caribbean (ECLAC) Sub-regional Headquarters for the Caribbean. The Commonwealth Secretariat’s Senior Director for the Economic, Youth and Sustainable Development Directorate, Ruth Kattumuri, will lead panel-wide discussions.

Given the ACS’s role of enhancing cooperation within the Greater Caribbean, Horne-Bique will provide a perspective on COVID-19 driven responses and post-COVID-19 recovery in the Greater Caribbean. Horne-Bique’s presentation will set the stage for her fellow panelists, highlighting the importance of partnerships in the sustainable development of the wider region. From their respective institutional vantage points, Deric and Abdulkadri will elaborate on the role of the UN in lending support to the Caribbean in this “COVID-19 moment.” Kattumuri will provide a Commonwealth perspective on the issues, taking into account the commonwealth secretariat’s role as a key multilateral partner for its Caribbean small states members. 

A cross section of the public and private sectors, as well as some non-state actors, are expected to be on hand in the webinar’s virtual audience.

The webinar takes place from 10 a.m. to 12:30 p.m. (Atlantic Standard Time). For registration details, please visit https://sta.uwi.edu/daoc/webinars.

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Agriculture At A Crossroads In Caribbean And Latin America: World Bank Study

BRIDGETOWN — Agriculture and food systems in Latin America and the Caribbean Region (LAC) stand at a crossroads. The declining visibility to public policy makers of farming and ranching in the rapidly urbanizing region has contributed to the perception that agriculture has diminished in importance and that attention can safely shift to other priorities.

This perception is misguided: the role played by agriculture has not diminished. On the contrary, agriculture and food systems make vital contributions to a diverse set of development objectives, including growth, poverty reduction, food and nutrition security, and climate resilience. As this report highlights, the forces shaping the evolution of agriculture and food systems in LAC are creating exciting opportunities to promote transformational changes, the effects of which will be felt at multiple levels: nationally, regionally, and globally.

What happens in LAC agriculture and food systems matters for economies within the region, but it also matters worldwide. LAC agriculture and food systems are the source of two important global public goods. First, LAC is the world’s largest net food-exporting region, and LAC agricultural exports help to stabilize food supplies and reduce food price volatility worldwide. In early 2020, the novel coronavirus (COVID-19) pandemic sparked an unprecedented humanitarian and economic crisis that devastated lives and livelihoods worldwide. The crisis put more than a quarter of a billion people around the world at risk of suffering acute hunger within 12 months, including hundreds of millions in LAC who fell into poverty and suffered devastating socio-economic consequences. Disruptions to global food supplies linked to the COVID-19 pandemic drew attention to the importance of LAC as a major net exporter of food and pointed to new opportunities for promoting greater intra-regional economic cooperation, in terms of production, trade and technology. Second, LAC is the world’s largest provider of ecosystem services. The Amazon basin, the forests of Central America, and other biomes in the Andean region and in the Southern Cone host vast stores of biodiversity, sequester huge amounts of carbon, and perform atmospheric regulatory functions that affect weather patterns worldwide. LAC will continue to produce these two global public goods only if the region’s agriculture and food systems evolve in ways that avoid threatening them and that capitalize on opportunities. If the complex tradeoffs between growing the economy, reducing poverty, feeding the population, improving nutrition, safeguarding human health, and preserving natural capital are not managed successfully in LAC, the cost to humanity will be extremely high.

1.1 Objectives of the report

The purpose of this report is to improve understanding of the transformational opportunities offered by LAC’s agriculture and food systems to contribute to growth, employment, and food and nutrition security while sustaining the region’s natural capital endowments and helping to mitigate climate change. This will be achieved by describing how demand- and supply-side forces are transforming LAC’s agriculture and food systems, exploring how long-term trends and short-term disruptors could affect future performance, and identifying measures that policy makers can take to facilitate the emergence of dynamic modern agriculture and food systems capable of performing the multiple functions that are expected of them.

The report is forward-looking: it adopts a long-term perspective and considers a time horizon up to 2030. The time line was chosen to extend far enough into the future to allow for the sector’s potential transformation in the region, factoring in the impact of ongoing trends and potential disruptions, but not so far as to lie beyond the sight line of today’s policy makers. The chosen horizon, furthermore, aligns with the Sustainable Development Goals (SDG) agenda set forth by the United Nations for the global community to meet in the coming decades, which identifies specific targets to be met by 2030. The alignment is appropriate, because the future performance of LAC agriculture and food systems will directly influence the achievement of (or failure to achieve) a number of SDGs, due to the impact of agriculture and food systems on growth, employment, food and nutrition security, and the environment.

1.2 Organization of the report

Including the introduction, the report contains six sections. Section 2 takes stock of the recent performance of LAC agriculture and food systems, briefly summarizing the contribution of these systems to a diverse set of development objectives including growth, job creation, food and nutrition security, and ecosystem sustainability. Section 3 considers the governance of LAC agriculture and food systems, assessing the effectiveness of public policies and supporting investments to achieve desired performance outcomes. Section 4 discusses the drivers that shape the evolution of agriculture and food systems, distinguishing between trends (slow-moving demographic, technological, and economic forces whose impacts will be felt gradually) and disruptors (fast-moving and often unexpected forces, such as technology breakthroughs or policy changes, that could lead to rapid change). Section 5 examines the road ahead, using scenario analysis to consider how future performance outcomes could be affected by the various drivers. Section 6 describes a series of proposed actions that can shape the transformation of agriculture and food systems to achieve outcomes that align with society’s long-term goals and offers some final thoughts about the road ahead.

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COVID-19: Slow Road To Jobs Recovery Tor The Caribbean And Latin America

SANTIAGO, Chile — The labor market in Latin America and the Caribbean faces a slow recovery after the COVID-19 pandemic, highlighting the need for “active macro policies” and other measures to promote sustainable development alongside getting people back into the workforce. 

That is the main finding of a joint report published on Tuesday by the UN’s Economic Commission for the region, ECLAC, and the International Labor Organization (ILO).

It was presented simultaneously in the capitals of Santiago, Chile, and Lima, Peru, via a joint virtual press conference led by Alicia Bárcena. the ECLAC Executive Secretary, and Vinícius Pinheiro, ILO’s Regional Director. 

“In terms of employment, the health crisis affected vulnerable groups above all, deepening inequality in the labor market. Women have been most affected by job losses and the decline in labor market participation. A strategic view must link sustainable development with job creation,” they said. 

Surviving an ‘unprecedented blow’ 

COVID-19 has dealt “an unprecedented blow” to economies and labour markets in Latin America and the Caribbean, leading to the biggest contraction in the region in the last 100 years. 

The greatest effects were felt in the second quarter of this year, when an estimated 47 million jobs were lost, compared with 2019.   

Many people who found themselves without a job were unable to swiftly re-enter the workforce, or withdrew entirely, impeded by mobility restrictions which prevented them from seeking employment. 

Women, young people and migrants are among those who have been heavily impacted, and the report also looks at how the crisis has affected employment for people 15 to 24 years old. 

Grim prospects for youth 

The pandemic has had a greater impact on youth, partly because there are fewer entry-level vacancies around, fewer temporary contract renewals and fewer hires following probationary periods, the report reveals. 

Furthermore, the lower likelihood of finding a job has discouraged young people from seeking employment, leading to a rising number who are neither looking for work nor studying. 

“These long periods of inactivity have lasting effects on their career path: more informality and greater labor market exclusion in the future”, the report cautions. 

Subsidies and skills training 

The two UN organizations have called for promoting young people’s integration into the labour market by combining classroom training followed by internships.   

Monetary subsidies would ensure attendance and participation, and employment services would support their re-entry into the workforce. 

Young people who have been made jobless could also benefit from vocational training, which would facilitate re-skilling or re-training. Meanwhile, “digital technologies must be harnessed to enhance learning capacity and thereby close the digital gaps between them.” 

Stimulating job growth 

The report warns that based on the average economic growth rate over the past decade, returning to pre-crisis economic activity levels will take several years, which will translate into a protracted jobs recovery. 

Any return would require furthering environmental policies that stimulate job growth, the authors said, bolstered by “active fiscal policies that foster employment, with labor-intensive investment projects” focused on sustainability. 

These in turn must be accompanied by industrial and technological policies, they added, geared at building production capacity and increasing competitiveness, along with financing for small business and medium-sized enterprises.

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Caribbean States Need Urgent Help To Face High Debt Due To COVID-19: ECLAC

SANTIAGO, Chile — Caribbean countries, especially the small island states, need support from the international community to confront the “perfect storm” that is looming over them: heavy indebtedness and a liquidity crisis, vulnerability to climate change, and high expenditures due to the COVID-19 pandemic, Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), said during a panel discussion on “Challenges for the Caribbean to build back better.”

As part of the institution’s “Caribbean First” strategy, Bárcena presented during the panel The Caribbean Outlook: forging a people-centered approach to sustainable development post-COVID-19, which provides an assessment of the subregion’s current situation and offers policy recommendations for building back better after the pandemic.

“The Caribbean has made enormous fiscal efforts to cope with COVID-19 (between 0.5 percent and five percent of GDP in the 12 countries analyzed, with the exception of Barbados). However, these resources are insufficient in the current context,” said Bárcena, who recalled that the subregion’s countries – like the rest of the Latin American nations – are considered to be middle income, which hinders their access to international financing under favorable conditions.

ECLAC forecasts a 6.9 percent contraction in the subregion’s GDP in 2020 (excluding Guyana), on top of a fiscal deficit (estimated at 2.1 percent of GDP in 2018, showing an upward trend) and high levels of public debt, which are also on the rise (amounting in 2019 to 67.6 percent of GDP).

The document presented by ECLAC indicates that tourism has been one of the sectors most affected by the pandemic in Caribbean countries (a contraction of between 6.6 percent and 8.5 percent of GDP is forecast in tourism), while health expenditures related to COVID-19 amounted to $260 million dollars during the first quarter of 2020 alone.

At the same time, the socioeconomic effects of the pandemic observed in the subregion reflect the underlying inequalities in access to education, according to the report. The temporary closure of school facilities has affected around 12 million students in 29 Caribbean countries.

“Financial assistance from donors has been inadequate” given the enormous challenges that Caribbean countries face, Bárcena underscored, warning that the “subregion’s liquidity crisis could become a solvency crisis, which would lead to a perfect storm.”

Annually, the Caribbean spends $3 billion dollars on losses and damages caused by environmental disasters and the effects of climate change, which increases the fiscal burden on countries, she stressed.

“The international community has to be present in these circumstances. You, the representatives of Caribbean countries, have told us that taking on more debt is not an option today,” ECLAC’s highest authority stated. “For years we have been promoting a debt relief initiative and the creation of a Resilience Fund for the Caribbean. We need an initial capitalization of $6.9 billion dollars (12.2 percent of the regional debt) and access to concessional financing.”

The Caribbean Outlook sets forth a series of development priorities for building back better in the subregion: strengthening food security and addressing poverty and inequality; promoting economic diversification and blue/green investments to build resilience; expanding access to broadband and promoting greater use of digital platforms for education and communications; strengthening risk assessment and disaster management; improving social protection and addressing the needs of vulnerable populations; and bolstering health infrastructure for the response to COVID-19.

In this sense, Bárcena called for addressing the declining trend in the subregion’s productivity, for diversifying and expanding trade in both goods and services, and for focusing on capacity-building. Also, she said, it is necessary to address gender inequalities, particularly those existing in the labor market.

“The recovery strategies will require proper planning if the subregion wants to achieve sustainable development. Planning must be considered State policy,” the senior United Nations official emphasized.

Providing comments on the panel were Allen Chastanet, Prime Minister and Minister for Finance, Economic Growth, Job Creation, External Affairs and the Public Service of Saint Lucia; Leslie Campbell, State Minister in the Ministry of Foreign Affairs and Foreign Trade of Jamaica; Andrew Fahie, Premier and Minister of Finance of the British Virgin Islands; Hilary Beckles, Vice Chancellor of the University of the West Indies; Mahmoud Mohieldin, Special Envoy on Financing the 2030 Agenda for Sustainable Development; Joseph Cox, Assistant Secretary-General of Trade and Economic Integration of the Caribbean Community (CARICOM) Secretariat; and Selwin Hart, Special Adviser to the Secretary-General on Climate Action and Assistant Secretary-General for the Climate Action Team of the United Nations.

These representatives thanked ECLAC for preparing The Caribbean Outlook, which they described as a detailed and profound report that offers concrete and pragmatic solutions to the Caribbean’s current challenges. They also reiterated their support for the debt relief initiative and the creation of a Caribbean Resilience Fund, as proposed by ECLAC, and advocated for decisive support from the international community, both to expand fiscal space in the subregion’s countries as well as to generate resilience with a view to building back better after the pandemic.

During the remarks made by the delegations, Efraín Guadarrama, Director General of American Regional Organizations and Mechanisms at the Secretariat of Foreign Affairs of Mexico, reaffirmed the commitment of his country and of the Community of Latin American and Caribbean States (CELAC) -in which Mexico currently holds the Presidency Pro Tempore- to the challenges of the Caribbean and to regional unity.

In her closing remarks, Bárcena also ratified ECLAC’s commitment to the “Caribbean First” strategy.

“You can count on the Commission,” she said. “We are very committed to financing for development. We will continue to promote proposals for debt relief in the Caribbean,” she emphasized.

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Countries of Latin America And The Caribbean Approve ECLAC’s Proposal For Transformation In The Wake of COVID-19

SAN JOSE, Costa Rica — The thirty-eighth session of the Economic Commission for Latin America and the Caribbean (ECLAC) concluded on Wednesday with countries’ recognition of the work carried out by the United Nations regional commission.

The Commission also approved the document Building a New Future: Transformative Recovery with Equality and Sustainability, in which the Commission calls for forging a new, post-COVID-19 future in the region through a transformative development recovery, with greater equality and sustainability.

ECLAC’s most important biennial meeting – which was held virtually for the first time – wrapped up its debates today with a ceremony featuring the participation of Amina Mohammed, Deputy Secretary-General of the United Nations; Carolyn Rodrigues-Birkett, Permanent Representative of Guyana to the UN and Chair of the Group of 77 and China; Alicia Bárcena, ECLAC’s Executive Secretary; and Rodolfo Solano, Minister of Foreign Affairs and Worship of Costa Rica, which is the country that now holds ECLAC’s presidency for the next two years.

A total of 800 people participated in the three-day event, of whom 400 were government delegates; 55 were from UN agencies, funds and programs; seven were representatives of regional organizations; and 300 were from civil society. In addition, 24 Ministers of Foreign Affairs and 19 deputy ministers were present on the session’s panels. In all, the meeting’s transmissions drew more than 40,000 views via ECLAC’s various online platforms aimed at public dissemination.

As the session came to a close, the representatives of 43 Member States and 9 associate members of ECLAC attending the event approved 14 resolutions in which they urge the Commission to continue its work collaborating with Member States on a comprehensive analysis of development processes geared to the design, monitoring and evaluation of public policies, and to keep providing operational services in the fields of specialized information, advisory services, training and support for regional and international cooperation and coordination.

In particular, they approved the “San José Resolution” – in honor of the capital of Costa Rica, the country that served as host of this session even though it was entirely carried out by virtual means – in which the countries of the region welcome the integrated approach to development that has marked the thinking of ECLAC since its inception, and the relevance of the issues examined, and express support for the general tenor of the conclusions set forth in the position document presented by the Commission. Furthermore, it instructs the organization to conduct studies and formulate public policy proposals in the countries, in close cooperation with their policymakers, with a view to supporting the building of national capacities for the achievement of sustainable development.

In her speech, the Deputy Secretary-General of the United Nations, Amina Mohammed, thanked the Government of Costa Rica for chairing the meeting and congratulated ECLAC’s Executive Secretary, Alicia Bárcena, “for her incredible leadership and commitment to the Latin America and Caribbean region.”

“On Monday, the UN Secretary-General (António Guterres) rightly praised ECLAC’s pioneering role in pushing for a more inclusive understanding of sustainable development. This week has proven once again that ECLAC has truly established itself as the regional think tank of the UN Secretariat in the region and as a key regional forum for policy dialogue,” she highlighted.

Mohammed indicated that the negative effects of COVID-19 in the region’s countries have constrained government responses to the urgencies of the pandemic and, in the medium term, undermine their capacity to build back better. “In this sense, the United Nations, and ECLAC in particular, have put many bold and innovative proposals on the table, such as an emergency basic income for the most vulnerable, tax exemptions and grace periods for Small and Medium-sized Enterprises, a basic digital basket, a new political and fiscal compact to ensure universal social protection and a green energy transition in the region, among others,” she stated.

“Over the past three days, we have heard the bold efforts that many countries of this region are undertaking to face the immediate impact of COVID-19 and to maintain the 2030 Agenda for Sustainable Development as the blueprint for their medium and long-term efforts. This gives us great hope,” Mohammed indicated. “Building back better means putting equality and environmental sustainability at the center of the recovery.”

Meanwhile, Ambassador Carolyn Rodrigues-Birkett congratulated Alicia Bárcena for the groundbreaking analyses that ECLAC continues to deliver, including the document presented at this session. “We must center our thinking on some critical actions as we chart the way forward, putting increasing emphasis on implementation of the 2030 Agenda for Sustainable Development and the importance of financing for development, which is one of the focuses of this meeting,” she stated.

Such actions include building policy coherence and institutional capacity, access to financing (which is critical to the global recovery and economic growth), the need for international financial institutions to adopt new approaches to risks and to reduce the pro-cyclical nature of financial flows to countries, and forging trusted development partnerships, with support from the UN Development System.

“The 2030 Agenda provides the framework to respond effectively to current challenges. To complement national actions, regional organizations like ECLAC play an important role in applying the Sustainable Development Goals (SDGs) to the regional context,” Rodrigues-Birkett said.

In her closing remarks, Alicia Bárcena thanked the Government of Costa Rica for its leadership during this session and its vision and commitment for the next two years at the helm of ECLAC. She also praised the Political declaration on a sustainable, inclusive and resilient recovery, which the Foreign Ministers of the 33 countries of Latin America and the Caribbean signed in the framework of ECLAC’s thirty-eighth session.

“There is broad consensus that the pandemic has exposed the inequalities and fragilities of the region’s countries. In this context, the international community must take into account the specific problems faced by middle-income countries in the region and by small island states in the Caribbean. We must bear in mind the structural gaps and the situation of vulnerability that have been exposed by COVID-19,” Bárcena emphasized.

“We have submitted for your approval a bold proposal, with evidence, with scenarios for managing this complex time of enormous challenges. Perhaps the most profound element is the firm call to change the development model and redouble efforts aimed at a post-COVID-19 recovery guided by the principles of inclusive development, equality and sustainability,” ECLAC’s Executive Secretary told participants.

“The document that we presented is a realistic and necessary document for action, which responds to the urgent needs of Latin America and the Caribbean. We want to reiterate that emerging from this crisis will require transformative leaderships and a capacity for dialogue and for forging political and social compacts that amass broad coalitions to guarantee universal access to health care, to social protection, to employment with dignity. A change in production and consumption modes is needed in order to build Welfare States,” Bárcena added.

“Building back with equality and sustainability is the way forward. This will necessitate social and political compacts to ensure that these objectives become State policy, with the participation of communities, businesses, women and young people. At the same time, new forms of global governance are needed to provide global public goods, such as universal health care (a coronavirus vaccine for all), climate security and protection of the atmosphere, financial stability, peace and human rights protection,” Alicia Bárcena stressed.

Finally, the Minister of Foreign Affairs and Worship of Costa Rica, Rodolfo Solano, also thanked ECLAC and its Executive Secretary for the meeting’s success in the context of this new, virtual reality. He indicated that the session’s debates pointed to the need to restore axioms of the social compact: solidarity, cooperation, the fight against inequality, inclusion and innovation. “These are the guideposts along the way for our work over the next two years,” the Foreign Minister specified.

“Multilateralism, solidarity and international cooperation are the only real way out of this unprecedented crisis, and they must become the center of our work. That is what the Secretary-General, António Guterres, indicated, and we share this view. The maxim of leaving no one behind must inspire the decisions that our countries take in the future, in fulfillment of development commitments and those of the 2030 Agenda,” Solano sustained.

“No transformation will be possible without the component of fresh resources from international financial institutions. But these resources cannot come with the same conditions that are required today; instead, it will be necessary to foster longer maturities, lower interest rates, and more extended grace periods. In this effort, ECLAC can support countries in building the narrative that explains their fiscal obligations in terms of the transformative commitment to arriving at well-being based on the criteria of the common good,” he stated.

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ECLAC Will Hold Biennial Meeting Virtually Next Week

SAN JOSE — The Economic Commission for Latin America and the Caribbean (ECLAC) will hold on October 26-28 its thirty-eighth session, the United Nations regional commission’s most important biennial meeting.

There, ECLAC will give an account of its activities in the 2018-2020 biennium and participants will address the priorities of the sustainable development agenda in the region in a scenario characterized by the crisis prompted by the pandemic. In addition, policies and proposals for a transformative recovery with growth, equality and sustainability will be presented.

The event, which will be held virtually for the first time in its history, will bring together representatives of ECLAC’s 46 member countries and 14 associate members.

It will be inaugurated on Monday, October 26 at 8 a.m. local time in Costa Rica (GMT -6) by Carlos Alvarado, President of Costa Rica, the country currently holding ECLAC’s presidency pro tempore; Miguel Díaz-Canel, President of the Republic of Cuba; António Guterres, Secretary-General of the United Nations; Alicia Bárcena, ECLAC’s Executive Secretary; Angel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development (OECD); and Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).

The Commission will present the region’s countries with a proposal for recovery and development oriented towards an inclusive welfare State, a technical shift and a productive transformation associated with environmental sustainability, which would strengthen equality and democracy as the most valuable legacy of modernity. This proposal is contained in the position document entitled Building a new future: A transformative recovery with equality and sustainability, which will be unveiled by the Executive Secretary, Alicia Bárcena, on Tuesday, October 27.

In addition, ECLAC will present its activities report on the work carried out in the last two years, including by its subsidiary bodies, and participants will define the mandates that will guide its work over the next biennium (2020-2021). In conjunction with this, a dialogue on the post-COVID-19 economic emergency will take place between foreign ministers and other senior authorities from Latin America and the Caribbean.

The session will also bring together researchers and members of civil society, along with academics and officials from nearly 30 intergovernmental, specialized and United Nations System entities.

ECLAC’s thirty-eighth session will be transmitted online via distinct platforms: the site https://live.cepal.org/ and the United Nations regional commission’s accounts on Twitter (https://twitter.com/cepal_onu) and Facebook (https://www.facebook.com/cepal.onu).

The full program of the meeting, along with general information, is available on the session’s special website: https://periododesesiones.cepal.org/38/en

What: Thirty-eighth session of ECLAC.

When: Monday, October 26 through Wednesday, October 28, 2020.

Who:

Inauguration, Monday, October 26, 8 a.m. local time in Costa Rica (GMT -6):

  • Carlos Alvarado, President of Costa Rica
  • Miguel Díaz-Canel, President of the Republic of Cuba
  • António Guterres, United Nations Secretary-General
  • Alicia Bárcena, ECLAC’s Executive Secretary
  • Angel Gurría, Secretary-General of the Organization for Economic Cooperation and Development (OECD)
  • Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) (via video)

Where: virtual connection via several platforms:

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ECLAC Knows How Latin America and The Caribbean Can Move Forward In A Post COVID-19 World

SANTIAGO, Chile — It will be essential to maintain and deepen active macroeconomic policies to achieve recovery and economic and social transformation after the crisis unleashed by the coronavirus pandemic, ECLAC indicated in a report entitled Economic Survey of Latin America and the Caribbean 2020. Main conditioning factors of fiscal and monetary policies in the post-COVID-19 era, released today by its Executive Secretary, Alicia Bárcena, during a virtual press conference.

This new edition of the survey, one of the main annual reports produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), presents an analysis of the economic effects caused by the pandemic in each country of the region and offers policy recommendations for addressing them, above all in relation to fiscal and monetary matters, while also highlighting the importance of international cooperation.

“The COVID-19 pandemic is having historic negative effects in economic, productive and social spheres, with lasting consequences and medium-term effects on growth and increased inequality, poverty and unemployment. That is why the process for economic activity (GDP) to return to its pre-crisis levels will be slower than what was observed during the subprime crisis (in 2007-2008),” Alicia Bárcena said.

According to the report, Latin America and the Caribbean is experiencing its worst economic crisis in a century, with an estimated -9.1% contraction in regional Gross Domestic Product (GDP). As a result, by the end of 2020, the level of GDP per capita will be the same as it was in 2010 – which means that there will have been a 10-year setback, with a sharp increase in inequality and poverty.

In addition, 2.7 million formal businesses are forecast to close in 2020, while unemployment is seen affecting 44 million people (with an increase of 18 million people versus the level seen in 2019, marking the largest surge since the global financial crisis).

Poverty is seen reaching the same levels observed in 2005, meaning that it would suffer a 15-year backslide, affecting 231 million people, while extreme poverty is forecast to reach 1990 levels, entailing a 30-year setback and affecting 96 million people.

“In this scenario, active macroeconomic policies will be needed to resume growth and to promote an agenda for structural transformation. Public revenue must be strengthened, conventional and non-conventional expansionary monetary policies must be maintained, and macroprudential regulation must be bolstered along with the regulation of capital flows to preserve macro-financial stability in the short and medium term. International cooperation is fundamental here to expand macroeconomic policy space,” ECLAC’s highest authority explained.

With regard to fiscal policy, the Economic Survey 2020 indicates that countries have made diverse fiscal efforts to mitigate the pandemic’s effects, amounting to 4.1% of GDP on average and accompanied by state credit guarantees of up to 10% of GDP. These fiscal efforts – along with declines in public revenue – have contributed to a bigger fiscal deficit and increased public debt.

In this sense, the document indicates that the challenge is to maintain an active fiscal policy in a context of greater indebtedness. To achieve this, active fiscal policies are needed in a framework of fiscal sustainability that is centered on revenue. Latin America and the Caribbean must increase its tax collection, which is currently 23.1% of GDP on average for the region’s national governments, compared with the 34.3% seen among countries of the Organization for Economic Cooperation and Development (OECD). To do so, States must fight tax evasion and avoidance, which amounts to 6.1% of regional GDP; consolidate individual and corporate income taxes; broaden the scope of taxes on wealth and property; and establish taxes on the digital economy and corrective taxes, such as environmental levies and others related to public health.

“Active fiscal policy must link the short term (emergency) with the medium and long term, to shift the development model towards productive transformation with sustainability and equality,” Alicia Bárcena stated. “Countries must orient public spending towards reactivation and economic transformation, strengthening public investment in sectors that foster employment, gender parity, social inclusion, productive transformation and an egalitarian transition towards environmental sustainability,” she added.

To expand policy space, ECLAC proposes better distributing global liquidity through international cooperation. In this area, multilateral credit institutions must be capitalized to expand their financing capacity and liquidity, both at the current juncture as well as with a longer view. Also, cooperation between central banks should be institutionalized to sustain expansionary monetary policies as well as those aimed at preserving macro-financial stability, and the global and regional financial safety net must be expanded to counteract the negative effects of volatility in financial flows at times of systemic crisis.

In this vein, the Fund to Alleviate COVID-19 Economics (FACE) initiative – presented recently by the government of Costa Rica – is an example of an international cooperation mechanism to improve the distribution of global liquidity so that it reaches developing countries.

The report also stresses that debt relief and restructuring for countries with vulnerabilities and a heavy burden of interest payments is necessary for expanding policy space. Currently, middle-income countries account for 96% of all developing countries’ debt (excluding China and India), which means that it is urgently necessary for the international financial community to expand liquidity conditions to address financing needs on a global level.

“Providing debt relief on interest payments would increase the availability of resources for development,” Alicia Bárcena emphasized. “In this area, there is an imperative need for debt relief in the Caribbean. ECLAC has advocated for financial support so that vulnerable economies in the Caribbean can generate resilience through an initiative to reduce their debt and the creation of a Caribbean Resilience Fund.”