Saturday, Feb 27, 2021

The Ibero-American secretary warns about the economic vulnerability of Latin America

The Ibero-American secretary warns about the economic vulnerability of Latin America

Ibero-American Secretary General Rebeca Grynspan warns of the economic vulnerability of Latin American countries to what is the "worst crisis since the Great Recession", according to the forum 'The impact of Covid-19 in Ibero-America'.
At the forum, organized by ' New Economy Forum ', Grynspan added that, in addition to the severe economic and social impact of this crisis in the region, Latin American economies start from a situation "much less favorable" than they were in 2008, due to a reduction in the margin of fiscal action and higher debt indicators.

The secretary explained that in the economic field it faces a triple negative impact of supply, demand and financing in the financial markets. To this last point, Grynspan has highlighted that in the emerging countries, 95 billion dollars of capital flows have come out at this time, which toughens conditions in the financial markets.

Grynspan considers it necessary to deploy loans with State guarantees in the different countries of the region so that the business fabric does not disappear, since the recovery of the American economies depends on it.

On the other hand, the secretary has indicated that, although the International Monetary Fund (IMF) announced a relief package for the 25 poorest countries in the world, it did not announce anything about middle-income countries.

"We urgently need action from the IMF and the Bank or the World," he said, requesting the adoption of loans with "soft conditions" to better withstand the weight of this crisis and the cuts in the credit ratings of the rating agencies in the different countries of the region, which tightens the conditions of access to the debt market.

Grynspan has positively valued the contributions of some organizations such as the IDB or CAF, through credit lines valued at around 10 billion dollars, but has warned that the region needs "much stronger" action by financial organizations international.

For her part, the Minister of Foreign Affairs, European Union and Cooperation of Spain, Arancha González Laya, has supported Grynspan's idea of ​​consolidating a coalition of middle-income countries to be able to resort to liquidity injections, as well as creating solutions “Innovators” for access to such liquidity in middle-income countries.

"I am particularly concerned with middle-income countries that are a bit caught up in low-income countries, for which there are solutions, and countries with more means that can, in some way, search or find those paths for liquidity", González Laya has pointed out.

Data from the UN Economic Commission for Latin America and Latin America (ECLAC) estimated that the region could register an increase of 30 million more people in poverty and almost 12 million more unemployed, representing a rate close to 12% in the region.

In the health field, Grynspan has pointed out that although the Ibero-American countries began to adapt solutions quickly, with actions of social isolation, their health systems are weaker than those of other more developed countries. The secretary has encrypted a total of 100,000 active cases in the region with 9,000 deaths.

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