As much as $2.5 billion of recovery funds could be immediately injected into the Caribbean to combat a Covid-19 collapse in tourism.
The financial support was signaled by the International Monetary Fund as it pointed to a “sudden stop” in tourism to the region.
This is projected to cause a 6.2% economic contraction in 2020 – the deepest recession there in more than 50 years, the IMF warned.
“The Caribbean economies are being hit hard by the collapse of the tourism sector, which accounts for 50% to 90% of GDP and employment in some countries,” an IMF blog said.
“The global cruise line and air travel industries have ground to a halt with major cruise companies canceling sailings through June and most airlines reducing or suspending service to the Caribbean region
“Key tourism source markets in North America and Europe are crippled by the pandemic. This, together with tight border controls and travel restrictions, has led to massive hotel booking cancellations and temporary resort closures – putting numerous people in the service sector out of work.
“Experience from previous crises suggests that the recovery could be delayed. There is also a risk that the ‘fear factor’ associated with the virus could have a long-lasting impact on tourism in the region, even after the pandemic recedes.”
The IMF is “actively engaging” Caribbean countries to offer policy advice and assistance, especially to those with pressing financing needs to cope with the pandemic.
And it is ready to deploy financial resources quickly.
Requests for a rapid credit facility by Haiti, Dominica, Grenada, and St. Lucia have already been approved, while emergency assistance for three additional Caribbean countries, including Jamaica, will be considered by the IMF’s executive board in the coming weeks. Barbados has also requested an augmentation of its existing Extended Fund Facility.
“The doubling of the IMF’s emergency financing capacity means that up to $2.5 billion could be made available immediately to the Caribbean region,” the fund added.
“In addition, other recent reforms allow immediate debt service relief to low-income countries, such as Haiti, affected by the crisis, thereby creating space for spending on urgent health needs.
“We are also working closely with the World Bank, Caribbean Development Bank, and other regional partners to explore innovative solutions and approaches to assist countries in the Caribbean navigate the challenges and pave the way to economic recovery.”