COVID-19 Health and Economic Policy Responses in Latin America

Written by Gustavo S. Azenha (Executive Director, ILAS), prepared with research by Renata Del Riego (Columbia College), Eduarda Oliveira (SIPA), and Tiago Amaral Ciarallo (SIPA)

Country Public Health Responses 

Most countries have placed restrictions on international travel, with some establishing complete or almost complete bans. Such measures have included restrictions or prohibition of the entry of foreign travelers, mandatory quarantines for foreign travelers, and border closures and controls for citizens and residents.  

Most countries have also encouraged citizens to limit exposure by staying home and avoiding non-essential activities outside the home that increase the risk of exposure.  Measures have included restrictions or closures of public spaces, and prohibitions or limitations on mass gathering. The timing, the scale, and compulsory/voluntary nature of such measures have varied at the national and subnational levels. Specific measures have included bans on large gathering and events, policies encouraging or mandating remote working when possible, and more systematic “shelter in place” or lockdown policies. 

The leadership of some countries (e.g., Brazil, Mexico, and Nicaragua) have been widely critiqued for dismissing or downplaying the threat posed by COVID-19, and for taking delayed or insufficient measures to limit the spread of the virus, to appropriately advise the general public on the risks and protective measures, to shore up health system capacity for adequate testing and care, and to address the economic impacts of the disease. Delayed or limited action stem from an under-appreciation of the threat, combined with a reluctance to disrupt economies, with some reasoning that the economic costs of containment measures outweigh the health and economic costs of the pandemic. 

Other countries have taken more swift and proactive stances in containing the spread of the virus and are instituting quarantine measures (e.g., Argentina, Bolivia, Chile, Colombia, Ecuador, and Peru) that aim to encourage or enforce social distancing.  Even in the countries where executive leadership initially downplayed or ignored the threat, measures to limit the spread of the virus and increase testing and treatment capacity have been increasingly adopted. In several countries (as in the US), subnational governments have taken more proactive and systematic measures to address the pandemic than national governments (e.g., Brazil), a reflection of different assessments of the gravity and urgency of the pandemic, and/or the subnational geography of COVID-19 cases.  

In the following table (Figure 3), we summarize the public health responses of some the countries in the region that have been mostly strongly impacted by COVID-19. Note that the chart indicates the initial time at which such policies were announced or implemented.  In many cases, policies have been amended, expanded, extended, or otherwise altered following their initial establishment. For example, border controls and travel restrictions for most countries have been modified since their initial form.

For detailed country-specific information on public health responses in the region, we recommend the COVID-2019 Observatory for Latin America and the Caribbean: actions by country webpage created by ECLAC (Economic Commission for Latin America and the Caribbean): https://eclac.maps.arcgis.com/apps/MapSeries/index.html?appid=57c96de0159641b095bd1c213c320ab9

For detailed and regularly updated country-specific timelines of the public health responses in the region,  we also recommend the Americas Society/Council of the Americas webpage: https://www.as-coa.org/articles/where-coronavirus-latin-america?utm_source=El+Chasqui&utm_campaign=f34fc27966-EMAIL_CAMPAIGN_2020_04_03&utm_medium=email&utm_term=0_cd943d262e-f34fc27966-24537405&mc_cid=f34fc27966&mc_eid=3d79086c50

Economic Responses

Countries have been announcing or adopting a variety of economic responses to address job, income, and revenue losses. Some countries have taken measures to address unemployment and economic and food insecurity, which have been created or heightened by the pandemic and measures taken to limit the spread of the virus. Economic stimulus and recovery policies and plans have developed in many countries by national and subnational governments, including fiscal measures, social protection policies for vulnerable populations, policies for small businesses, and new labor protection policies.  Responses have come in varied forms, including executive decrees, provisional measures, and new legislation. 

Governments have adopted a variety of policies targeting particular sectors of the economy that are essential and/or that have been the most adversely affected by the pandemic, such as the health, tourism, and food sectors.  Emergency measures have been taken to address the specific challenges of the health sector, aiming to augment health capacity and increase access to critical health technologies. For example, Argentina has announced measures to increase compensation of medical workers, as well as measures to eliminate import taxes on select medical supplies. In Brazil, several measures have been announced or adopted to amplify health systems capacity to provide care for those that contracted the virus. Several increases in funding to the Ministry of Health have been announced (the first of which was on March 11) to shore up capacity. Most recently (March 30th), the Brazilian Development Bank (BNDES) announced that it would be providing $388 million in credit to enable expansion of health sector capacity.  In Chile, a deal was reached between the Ministry of Health and private health care insurance companies to hold any price increases until July. In Mexico, the finance ministry announced on March 24th that it will provide $180 million to the defense ministry and navy for measures such as expanding hospitalization capacity and deploying health professionals to help combat the pandemic.

Emergency fiscal and monetary measures have been taken to mitigate the financial repercussions of the crisis for individuals, employers, and government institutions. Temporary suspensions or reductions in various taxes have been instituted by some countries to provide financial relief to individuals and/or businesses.  In addition to tax credits, tax deferrals, and tax reductions, new monetary policies have been adopted, including adjustments to interest rates, reserve requirements, and liquidity requirements. Several countries have also made adjustments to interest rates to provide relief and help stimulate the economy. Argentina announced adjustments to individual and corporate taxes and the relaxation of monetary policy by the Central bank. Argentina has also announced measures to postpone or reduce social security payments.  In Brazil, deferment of corporate taxes was included as part of a $26 billion stimulus measure announced by the Minister of Finance on March 16th. In Ecuador, President Moreno announced temporary tax breaks (90 days) to the tourism, small business, and export sectors. The Mexican government has made cuts to the benchmark interest rate. 

Measures for labor protection and to address unemployment have been a priority in many countries, including policies that seek to prevent or minimize unemployment and policies that provide assistance to those losing their jobs and income as a result of the crisis. A variety of new labor regulations have been created, including policies for teleworking, paid work leave, paid sick leave, unemployment insurance, prevention of discrimination, work hour reductions, and prohibitions on dismissal. In Chile, a new Labor Law was sanctioned, regulating remote working among other measures. Chile has passed new job protection legislation for those impacted by quarantine measures. As part of the government’s $12 million economic package, President Piñera has announced a new Employment Protection Law which aims to secure jobs for over 4.7 million workers. To provide relief to small and medium sized companies, Chile has temporarily suspended stamp taxes and extended credit lines for emergency loans through the public bank. Argentina, has announced assistance programs for employee salaries for small businesses affected by the quarantine. The stimulus measure announced by the Brazilian government includes funding to support social assistance payments and access to severance funds. On March 27th the Brazillian government also announced support to cover 2 months of minimum wage salaries for some small and medium sized businesses.   The Brazilian government has also announced measures allowing companies to temporarily make salary reductions or furlough workers, with the government subsidizing these actions. In Venezuela, President Maduro announced a prohibition on layoffs through December 31. In Mexico, President López Obrador announced plans to extend 1 million no- or low-interest loans to small businesses. More recently, agreements have been announced by the Mexican government to guarantee worker salaries for the month of April, and to provide protections for small and medium sized businesses. 

Countries have also established new social protection measures specifically targeting economic security of informal workers and vulnerable populations. Several countries have created, modified, or expanded cash transfer programs for the elderly, the unemployed, the underemployed, informal workers, and/or other vulnerable populations.  Argentina announced a $157 million family emergency fund for the month of April to support self-employed and informal workers no longer receiving income. The Brazilian Federal Legislature also passed an emergency universal income plan targeting economically vulnerable populations, which was approved by the President on March 31st.  Chile’s economic stimulus plans include provisions that allow low-income families to delay debt payments, and provide low income families with money (based on the number of dependents). Colombia’s government announced a $40 disbursement to 3 million low-income households. President Duque’s administration has also distributed 23 tons of food and 96 million gallons of water. The government of the Dominican Republic has announced temporary increases in disbursements to hundreds of thousands of families enrolled in the country’s social welfare program Tarjeta de Solidaridad for food and first aid products.  In Mexico, advances in pensions for senior citizens have been announced. 

Measures have also been taken in various countries to target housing insecurity stemming from the economic crisis, including prohibitions on evictions, rent freezes, and/or freezes on mortgage payments or rate increases. The Argentine government, for example, has called for temporary suspensions on evictions, rent freezes, and the freezing of mortgage rates.  Colombia has announced a grace period for mortgages and loan payments. In Venezuela, President Maduro announced a six-month suspension on all residential and commercial rent payments. In Mexico, a few states have applied rent freeze initiatives.

In the following table (Figure 4), we summarize the economic policy responses of some the countries in the region that have been mostly strongly impacted by COVID-19. Note that the chart captures a broad stroke view of the economic policies adopted, and the initial time at which such policies were announced or implemented. Although most countries in the chart have adopted fiscal, monetary, labor protection, and social protection policies, there is great variability in the nature and scale of such policies.  For example, the specific types of labor and social protection policies are highly variable, with the definition of benefits, beneficiaries, timelines, and other aspects being unique in each country.  Further, economic policies adopted have ranged from more robust, comprehensive, and integrated relief and recovery plans to more piecemeal policies addressing targeted concerns. Even where a more comprehensive approach has been taken, these have been followed by complementary policies or modifications to existing ones in response to new issues or concerns that have emerged.   

For detailed country-specific information on economic policy responses in the region, we recommend the COVID-2019 Observatory for Latin America and the Caribbean: actions by country webpage created by ECLAC (Economic Commission for Latin America and the Caribbean): https://eclac.maps.arcgis.com/apps/MapSeries/index.html?appid=57c96de0159641b095bd1c213c320ab9

We also recommend the Americas Society/Council of the Americas webpage, which includes detailed and regularly updated country-specific timelines of the economic responses in the region: https://www.as-coa.org/articles/where-coronavirus-latin-america?utm_source=El+Chasqui&utm_campaign=f34fc27966-EMAIL_CAMPAIGN_2020_04_03&utm_medium=email&utm_term=0_cd943d262e-f34fc27966-24537405&mc_cid=f34fc27966&mc_eid=3d79086c50

For additional information and resources prepared by ILAS on the impacts and responses of COVID-19 in Latin America and the Caribbean , please visit: http://ilas.columbia.edu/