The COVID-19 pandemic has magnified structural gaps and forced countries to expand their financial needs to face the emergency.
The Economic Commission for Latin America and the Caribbean (ECLAC) forecasted an increase in the region's foreign debt levels.
Between 2019 and 2020, the fiscal budget deteriorated in all Latin American countries, with indebtedness rising from 68.9 to 79.3 percent of the gross domestic product (GDP).
The deficit deepened in Central American and the Caribbean countries due to supply chain disruptions, declines in exports, and restrictions measures, especially in tourism services.
Even though the aid provided by multilateral institutions covered financing needs in some cases, a significant drop of up to 55 percent hit foreign direct investments.
COVID-19 could reverse decades of progress on #GenderEquality. Our new report with @UN_Women analyzes the measures adopted by governments in #LatinAmerica and the #Caribbean to mitigate the consequences of the pandemic for women and girls.— UN Development (@UNDP) March 9, 2021
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ECLAC warned that indebtedness puts at risk the region's economic recovery. The strengthening of policies to avoid tax evasion and make progress on taxes targeting property and wealth could serve as countermeasures.
The UN commission also proposed that spendings should target public investments, universal social protection, and support for small and medium-sized enterprises.
"The pandemic has magnified structural gaps and forced countries to expand their financial needs to face the emergency," ECLAC President Alicia Barcena said.