IMF chief hears about regional efforts to deal with Covid shock | Local company
Central Bank Governor Dr Alvin Hilaire said Caribbean countries have been hit particularly hard by Covid-19, as many economies rely heavily on tourism.
Hilaire, addressing the Caribbean ministerial meeting with International Monetary Fund (IMF) Managing Director Kristalina Georgieva earlier this week, said countries in the region are currently sorting out the appropriate timing and scale to unravel the measures. extraordinary tax and monetary policy of Covid-19. which they had adopted “as a whole, the region experienced sharp contractions in economic activity last year and at the beginning of this year”.
He said the contraction had completely erased several years of growth and that in response to the shock of Covid-19, âour policymakers quickly implemented a comprehensive package of unprecedented fiscal, monetary and regulatory measures to mitigate the fallout. negative on our populations.
âAcross the region, government fiscal measures included granting tax cuts, tax deferrals and subsidies to households and businesses, as well as direct funding for health infrastructure and equipment. and medical personnel. â
Hilaire said central banks have lowered their policy rates, injected substantial amounts of liquidity into banking systems and introduced regulatory moratoria on the treatment of deferred payments on loans and restructured facilities.
He said implementing these policy measures was essential for regional economies to overcome immediate challenges, including strengthening health systems and protecting disadvantaged people who have been disproportionately affected by the pandemic.
“At the same time, the measures have further constrained fiscal space, added to already high debt levels, contributed to the downgrade of credit ratings in some cases and increased risks to financial stability.”
Hilaire said Caribbean countries are now well into the second year of the pandemic and the end of the crisis is still very uncertain.
âDespite this, generally satisfactory progress in access to vaccines has given the Caribbean economies a boost to reopen and eventually return to growth, although reluctance to vaccinate remains a problem in achieving herd immunity.
“The enormous uncertainty therefore has an impact on how we plan the outcome of policy measures, as there are still immediate needs to be addressed,” he said, noting for example that a particular concern is how to safely restore high quality education for the region’s youth, a key investment for a sustainable future.
He added: âOverall, we recognize that removing Covid-19 support measures is not an easy undertaking. On the fiscal front, policies have translated into higher government spending at a time when government revenues have contracted. Initially, most countries offered generalized budget support. âCMC