Owing to the missed opportunities of the post-2008 period, most Latin American and Caribbean governments have very limited fiscal space with which to manage the COVID-19 pandemic. Nonetheless, if their limited ammunition is well-aimed, it could go a long way toward mitigating the crisis.
WASHINGTON, DC – Confronting a pandemic is a grueling trial even for the most advanced economies. For indebted governments in Latin America and the Caribbean, it is harder still. Many countries’ fiscal positions are worse now than they were when the 2008 global financial crisis erupted. Worse, stimulus policies that work in normal times will not work against the fallout from COVID-19, and financing is becoming increasingly scarce as investors flee to safer assets and markets.
WASHINGTON, DC – Confronting a pandemic is a grueling trial even for the most advanced economies. For indebted governments in Latin America and the Caribbean, it is harder still. Many countries’ fiscal positions are worse now than they were when the 2008 global financial crisis erupted. Worse, stimulus policies that work in normal times will not work against the fallout from COVID-19, and financing is becoming increasingly scarce as investors flee to safer assets and markets.