{
  "title": "Transcript of the Press Conference on the Regional Economic Outlook Update for Latin America & the Caribbean",
  "publication": "IMF News, June 26, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/06/29/tr062620-transcript-press-conference-reo-update-latin-america-and-the-caribbean",
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  "summary": "Regional GDP contraction in 2020: 9.4 percent.",
  "publishDate": "2020-06-26",
  "sections": [
    {
      "heading": "Regional outlook and pandemic impact",
      "content": "- Regional GDP contraction in 2020: 9.4 percent.\n- Regional recovery in 2021: 3.7 percent.\n- Revision vs April 2020 projection: contraction is 4 points percentage more severe.\n- Pandemic human toll: \"more than 100 mil vidas perdidas.\"\n- Share of global COVID-19 cases: \"casi el 25 por ciento del total mundial.\"\n- Epidemiological context: infection and mortality per capita approaching rates in Europe and United States.\n- Fiscal/health capacity constraints noted: high informality, elevated ICU occupancy, limited testing and tracing capacity.\n- Real-time indicators showing pronounced weakness: production industrial, consumo eléctrico, ventas minoristas, empleo — indicating a very pronounced Q2 activity decline.\n- Social distancing measures likely to be prolonged, depressing activity, employment, and limiting speed of recovery in H2 2020.\n- Capital markets: normalization of financial conditions after aggressive central bank expansions in advanced economies; several Latin American countries accessed international capital markets; observed stability and appreciation in major regional financial markets, but financing conditions still tighter than pre-pandemic and volatility risks remain."
    },
    {
      "heading": "Country-level projections (selected)",
      "content": "- Argentina 2020 contraction: 9.9 percent.\n- Brazil 2020 contraction: 9.1 percent.\n- Chile 2020 contraction: 7.5 percent.\n- Colombia 2020 contraction: 7.8 percent.\n- Mexico 2020 contraction: 10.5 percent.\n- Peru 2020 contraction: 13.9 percent.\n- Panama: no specific point estimate published on this update; region subgroup (Central America) contraction: 5.9 percent — Panama expected to contract less than subgroup average."
    },
    {
      "heading": "Policy priorities and recommendations",
      "content": "- Fiscal policy:\n  - Immediate priority: protect lives and household incomes.\n  - Support: programs for families, companies, and health budgets.\n  - Constraints: limited fiscal space requires reprioritization and efficiency gains in public spending.\n  - Need to find creative targeting mechanisms, especially where informality is high.\n  - Medium-term concern: debt sustainability risks — \"un compromiso claro con un plan de mediano plazo de consolidación fiscal y reformas estructurales\" crucial to restore confidence.\n- Monetary policy:\n  - Should remain accommodative given low inflationary pressures.\n  - Expectation: policy rates to continue declining where space exists; some countries still have room for further cuts.\n- Labor and corporate support:\n  - Maintain employment relationships and productive capacity via payroll support and working capital financing to avoid closures of otherwise viable firms, reduce long-term unemployment, and support recovery.\n- Sequencing:\n  - Once pandemic stabilizes, countries should transition toward monetary and fiscal sustainability to preserve inflation gains and medium-term stability."
    },
    {
      "heading": "Debt, financing, and IMF support",
      "content": "- IMF emergency lending since pandemic onset: 70 loans approved globally for a total of 25,000 millones de dólares.\n- Loans to the region: 17 approvals totaling 5,200 millones de dólares.\n- Flexible Credit Line (FCL) access approved for Chile, Peru; renewed for Colombia; Mexico also has an FCL — combined FCL backing for these four countries: 107 mil millones de dólares.\n  - These FCL resources are contingent lines not yet drawn but available if balance-of-payments conditions deteriorate.\n- Discussion of debt restructuring:\n  - Argentina and Ecuador are in ongoing negotiations with private creditors.\n  - IMF published two technical notes on Argentina's debt sustainability; no additional commentary beyond those notes at this time.\n  - Ecuador received an emergency credit line of approximately 650 millones de dólares; discussions ongoing for a new program with IMF teams working rapidly but no amounts or timing provided.\n- Regional liquidity backstops:\n  - FLAR exists but is \"very, very small\"; lack of large regional mechanisms makes IMF instruments attractive for countries seeking buffers."
    },
    {
      "heading": "Country-specific observations and issues raised",
      "content": "- Argentina:\n  - Rapid and aggressive public health response helped keep contagion and death rates relatively low in region.\n  - Economic hit driven by containment measures; employment indicators not updated until broader macro review in October annual meetings.\n  - Use of central bank financing partly sterilized — seen as sensible under constraints, but normalization and monetary sustainability will be needed later.\n  - IMF awaiting formal requests regarding Article IV or programs; authorities focused on debt restructuring currently.\n- Mexico:\n  - Monetary policy stance in late 2019 judged \"more strict\" than appropriate then; policy rate reduced to 5 percent.\n  - IMF team considers further room for rate cuts given low utilization of productive factors and recessionary conditions.\n  - Structural factors, more than monetary policy, are main constraints on growth; T-MEC and potential reconfiguration of global value chains (\"from 'just in time' to 'just in case'\") could benefit Mexico over time but unlikely to fully offset near-term investment contraction or be a large force over the next two years.\n- Chile:\n  - Downward revision driven by weak recent activity data (IMACEC, industrial activity, sales, employment — ~1 million formal and informal jobs lost).\n  - More protracted and stricter distancing measures assumed, contributing to lower projections.\n  - Adverse scenarios from April have been rebalanced; overall risk balance improved relative to April but remains tilted to the downside.\n- Ecuador:\n  - No explicit country projection published in this update; expected downward revision due to lower oil prices and early, severe COVID-19 outbreak.\n  - Authorities engaged in constructive debt negotiations with international creditors; IMF teams working on a new program but no details released.\n- Panama:\n  - As an open, trade- and logistics-dependent economy, severely affected by global activity decline; expected to contract less than Central America average but still face a very difficult 2020 with recovery anticipated in 2021."
    },
    {
      "heading": "Risks and outlook for debt sustainability",
      "content": "- Global and regional public debt-to-GDP ratios expected to rise significantly.\n- Importance of credible medium-term fiscal strategies to stabilize and eventually reduce debt-to-GDP ratios once output gaps close.\n- IMF engagement: technical assistance to design fiscal plans consistent with fiscal responsibility frameworks and institutional strengths (independent central banks, floating exchange rates, inflation targeting, fiscal rules) to reassure markets.\n- Policy trade-off: need to provide temporary fiscal impulse in 2020 while ensuring medium-term sustainability to avoid hampering future growth.\n\nTranscript of the Press Conference on the Regional Economic Outlook Update for Latin America & the Caribbean, June 26, 2020, IMF Communications Department\n\n---\n\n\n References\n\n- Argentina and the IMF\n- Chile and the IMF\n- Ecuador and the IMF\n- Transcripts\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/06/29/tr062620-transcript-press-conference-reo-update-latin-america-and-the-caribbean"
    }
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    "Published: June 26, 2020",
    "Regional GDP contraction in 2020: 9.4 percent.",
    "Regional recovery in 2021: 3.7 percent.",
    "Revision vs April 2020 projection: contraction is 4 points percentage more severe.",
    "Pandemic human toll: \"more than 100 mil vidas perdidas.\"",
    "Share of global COVID-19 cases: \"casi el 25 por ciento del total mundial.\"",
    "Epidemiological context: infection and mortality per capita approaching rates in Europe and United States.",
    "Fiscal/health capacity constraints noted: high informality, elevated ICU occupancy, limited testing and tracing capacity.",
    "Real-time indicators showing pronounced weakness: production industrial, consumo eléctrico, ventas minoristas, empleo — indicating a very pronounced Q2 activity decline.",
    "Social distancing measures likely to be prolonged, depressing activity, employment, and limiting speed of recovery in H2 2020.",
    "Capital markets: normalization of financial conditions after aggressive central bank expansions in advanced economies; several Latin American countries accessed international capital markets; observed stability and appreciation in major regional financial markets, but financing conditions still tighter than pre-pandemic and volatility risks remain.",
    "Argentina 2020 contraction: 9.9 percent.",
    "Brazil 2020 contraction: 9.1 percent.",
    "Chile 2020 contraction: 7.5 percent.",
    "Colombia 2020 contraction: 7.8 percent.",
    "Mexico 2020 contraction: 10.5 percent.",
    "Peru 2020 contraction: 13.9 percent.",
    "Panama: no specific point estimate published on this update; region subgroup (Central America) contraction: 5.9 percent — Panama expected to contract less than subgroup average.",
    "Fiscal policy:",
    "Monetary policy:",
    "Labor and corporate support:",
    "Sequencing:",
    "IMF emergency lending since pandemic onset: 70 loans approved globally for a total of 25,000 millones de dólares.",
    "Loans to the region: 17 approvals totaling 5,200 millones de dólares.",
    "Flexible Credit Line (FCL) access approved for Chile, Peru; renewed for Colombia; Mexico also has an FCL — combined FCL backing for these four countries: 107 mil millones de dólares.",
    "Discussion of debt restructuring:",
    "Regional liquidity backstops:",
    "Argentina:",
    "Mexico:",
    "Chile:",
    "Ecuador:",
    "Panama:",
    "Global and regional public debt-to-GDP ratios expected to rise significantly.",
    "Importance of credible medium-term fiscal strategies to stabilize and eventually reduce debt-to-GDP ratios once output gaps close.",
    "IMF engagement: technical assistance to design fiscal plans consistent with fiscal responsibility frameworks and institutional strengths (independent central banks, floating exchange rates, inflation targeting, fiscal rules) to reassure markets.",
    "Policy trade-off: need to provide temporary fiscal impulse in 2020 while ensuring medium-term sustainability to avoid hampering future growth.",
    "[Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)",
    "[Chile and the IMF](http://www.imf.org/external/country/CHL/index.htm)",
    "[Ecuador and the IMF](http://www.imf.org/external/country/ECU/index.htm)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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