To face the socioeconomic impact of the economic crisis created by COVID-19, the Economic Commission for Latin America and the Caribbean (ECLAC) proposes to the governments of the region to guarantee temporary monetary transfers for six months to guarantee basic needs and sustain the consumption of the homes, which indicates will be crucial for the reactivation.
In its report on the Economic Impact of Coronavirus Disease in Latin America and the Caribbean (COVID-19), ECLAC (la Comisión Económica para América Latina y el Caribe or CEPAL in Spanish) reiterated that the scope of these transfers must be permanent, go beyond people in poverty and reach broad strata of the vulnerable population that fall under it.
CEPAL analysts explain that this would allow progress towards a universal basic income that would be gradually implemented over a defined period according to the situation in each country.
“Taking into account the limited fiscal space of the countries of the region, the most viable alternative is to make transfers of an amount equal to a poverty line for six months, which would allow covering a basic food basket, as well as other basic needs. Its implementation would require an additional cost of 2.8% of GDP to cover all people who will be in poverty in 2020,” says the agency.
The pandemic has altered economic and social relations in a radical way and its consequences will transcend its duration, assures CEPAL for which it shares the following political recommendations:
1. Provide sufficient fiscal stimulus to support health services and protect income and jobs.
2. Strengthen social protection systems to support vulnerable populations.
Implement an emergency basic income for six months for an amount equivalent to a poverty level for the entire population in poverty.
1. That central banks must ensure the liquidity of companies to guarantee their operation and the stability of the financial system. Expansive monetary policies will not suffice. Central banks will need to intervene directly to provide the liquidity needed by the financial and non-financial private sectors, in particular, to ensure full liquidity in the overnight bank loan market and to avoid disruption of payment chains.
2. International cooperation and multilateral organizations must design new technical and financial instruments to support countries facing fiscal pressure. Some heavily indebted countries may have problems servicing their debt, restructuring, or increasing it due to the possible collapse of financial markets, which would undermine the much-needed public spending on health, social protection, and economic stimulus. Countries must adapt their responses to local conditions and those responses must be reinforced by international cooperation.
Source: Dominican Today.
