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World Bank calls for strong policy response to Covid-19

Caribbean governments should ramp up social assistance while supporting financial sector institutions as they plan for the post-coronavirus economy, according to a new report from The World Bank.  

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TheBahamasInvestor.com
Tuesday, April 14, 2020
Tuesday, April 14, 2020

Caribbean governments should ramp up social assistance while supporting financial sector institutions as they plan for the post-coronavirus economy, according to a new report from The World Bank which encourages policy-makers to adopt a forward-looking approach amid an expected 4.6 per cent drop in regional GDP this year.

The report encourages policy-makers to adopt a forward-looking approach amid an expected 4.6 per cent drop in regional gross domestic product (GDP) this year.


“Governments across Latin America and the Caribbean face the enormous challenge of both protecting lives and limiting the impact of the economic fallout,” said Martín Rama, World Bank chief economist for the Latin America and the Caribbean region. “This will require coherent, targeted policies on a scale rarely seen before.”

As the region responds to Covid-19 with closures and quarantines, the World Bank urged island governments to strike the right balance between health costs and the long-term impact on the economy emphasising that “countries in Latin America and the Caribbean do not have the fiscal space enjoyed by advanced countries.”

To spur recovery, the bank suggests direct government support for strategically important firms and sectors, alongside targetted incentives for banks to fiscally support small and medium-size enterprises (SMEs). Governments may also need to consider taking ownership in key businesses, recapitalising banks and absorbing non-performing assets, according to the bank.

“We need to help people face these enormous challenges and make sure that financial markets and employers can weather the storm,” said Humberto López, World Bank acting vice president for the Latin America and the Caribbean region. “That means limiting the damage and laying the groundwork for recovery as fast as possible.”
The World Bank predicts a return to growth in 2021, with regional GDP set to expand by 2.6 per cent next year.

Prime Minister Dr Hubert Minnis (pictured) gave a national address April 13, 2020 at the Office of the Prime Minister. Read his full remarks here plus an infographic on the current state of the Covid-19 outbreak in The Bahamas.

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