Cruise ships are docked. Flights are grounded and tourists are staying home. As the coronavirus grinds the world economy to a halt, the small, open economies of the Caribbean are taking a hard hit.
The Bahamas, Barbados and Jamaica are dependent on tourism. Oil and natural gas prices are plunging, hurting Guyana, Suriname, and Trinidad & Tobago.
A recent exploration of economic scenarios gives some indication of the extent to which the reduction in tourist arrivals could impact the GDP of Caribbean countries. The worst scenario: a 75% reduction in tourism arrivals over the last 3 quarters of the year could reduce GDP by between 11% and 26% in the case of The Bahamas, with similar numbers for Barbados and Jamaica. Governments need urgent financial support.
At the Inter-American Development Bank, we are taking steps to help our six Caribbean member countries. We are increasing the availability of funds, adjusting our lending instruments, re-channeling technical assistance grants, and establishing exchange and learning platforms, to provide immediate responses to the countries’ specific demands. We are devoting our entire network of collaboration, knowledge, and dialogue to serve the regional effort combating the pandemic.
For our 26-member countries, we have added $3.3 billion in additional funds to the 2020 lending program. These resources, together with the available programmed resources, make up to $12 billion available to the countries to address the health crisis and the economic impacts stemming from the pandemic.
We have immediately offered countries the ability to reallocate resources from the health portfolio and will consider reformulating the entire loan portfolio to redirect available resources for an amount equivalent to 10% of the undisbursed loan balances in the investment portfolio or up to $50 million, whichever occurs first. The IDB is also making $50 million of our own resources available to Latin America and the Caribbean for national and regional grant assistance, as well as technical cooperation funds from nonregional partners under the IDB’s administration.
IDB Invest will join this effort with $5 billion in 2020 for Latin America and the Caribbean. Of this amount, US$4.5 billion from its investment program will be devoted to enable lines to support the financing of the entire trade and supply chain and finance companies in critical sectors impacted by the crisis. In addition, IDB Invest will create a new Crisis Mitigation Facility with $500 million to finance the delivery of services and inputs for the health sector and provide access to short-term financing for small and medium-sized enterprises. These financial efforts are being supplemented by the streamlining of our fiduciary processes and approval times so we can provide the firm and timely support demanded by the situation.
We will also be coordinating closely with other multilateral financial institutions such as the IMF and the World Bank. This is an all-hands-on-deck moment.
The health and safety of the people of the Caribbean is our top priority. The steps governments are taking to protect the lives of their citizens are encouraging. We urge all governments to enforce urgent regulations to restrict the spread of the virus. And we urge citizens to abide by these rules. Our teams in your countries are fully engaged with policy makers to fulfill the most urgent needs and also plan for the future. You can count on the IDB Group, with all the human and financial resources at our disposal, to help you through these challenging times.