## How the Caribbean Can Avoid Becoming a COVID-19 Long-Hauler

_IMF News, March 12, 2021_

## Source details

**Canonical URL:** [How the Caribbean Can Avoid Becoming a COVID-19 Long-Hauler](https://www.imf.org/en/news/articles/2021/03/11/na031221-how-the-caribbean-can-avoid-becoming-a-covid-19-long-hauler)

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## Bibliographic details
- Authors: Krishna Srinivasan
- Published: March 12, 2021

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### Overview
- Many Caribbean countries risk becoming COVID-19 economic long-haulers, with the pandemic’s economic fallout potentially persisting long after the health emergency is controlled.
- The region’s high reliance on tourism and small size/limited policy room made Caribbean economies among the most affected by the pandemic.

### Impact on tourism and economic contraction
- Annual hotel stays plummeted by 70 percent.
- Cruise ship travel was completely halted.
- Tourism-dependent countries contracted by 9.8 percent in 2020.
- Commodity exporters in the region (Trinidad & Tobago, Suriname, and Guyana) saw a mild contraction of 0.2 percent.
- Renewed waves of infections and travel restrictions in source countries (US, UK, and Canada) have impeded a tourism rebound.
- Potential long-term scarring includes:
  - Loss of jobs hitting mostly youth, women, and less educated workers.
  - Increases in poverty and inequality.
  - Potential closings and bankruptcies of hotels, resorts and associated tourism services (restaurants, shops and tour operators).
  - Fewer flights to and within the region as airlines struggle to recover.
  - Loss of global ‘market share’ if cruise operators permanently reroute ships to other destinations.

### Financing gap
- Assuming no new external financing and realistic tourism scenarios, the region’s financing gap is estimated at around $4 billion, or 4.8 percent of 2020 regional GDP.
- The ever-present risk of natural disasters could widen the financing gap.

### Policy priorities and short-term measures
- Protecting lives and livelihoods is the priority: spending on treatment, testing, contact tracing, and vaccine access is imperative to limit economic scarring.
  - Many Caribbean nations have joined the COVAX initiative and have made bilateral agreements to obtain additional vaccines, although coverage is still low.
  - Given logistical challenges and lack of economies of scale at the national level, strong regional collaboration is key to ensure efficient vaccine distribution.
- Economic support should be sustained until the recovery is entrenched, including measures to safeguard financial stability.
- To create space for support and rebuild buffers, governments should accelerate progress on strengthening fiscal policy frameworks.
- The extension of the G20's Debt Service Suspension Initiative until June 2021 provides some relief for countries with large borrowing needs and debt sustainability concerns.
- Securing additional IMF financial support early could:
  - Help smooth adjustment by bridging near-term financing gaps.
  - Catalyze additional international resources.
  - Provide a macroeconomic stability anchor.
  - Support deeper reforms that deliver sustainable and inclusive growth.

### Medium-term measures and structural reforms
- Once the recovery takes hold, countries should tackle debt problems with well-calibrated and appropriately balanced revenue and expenditure measures to reduce primary deficits while minimizing contractionary impact on growth.
- Mobilize concessional financing to help build resilience against future shocks.
- Complement fiscal measures with structural reforms to strengthen competitiveness and raise long-run growth.
- Regional actions:
  - The Caribbean Community has launched a Caribbean Economic Recovery and Transformation Plan to develop a financing strategy to support post-pandemic investment needs.
  - The IMF is partnering with the broader international community to find innovative solutions to help small developing states confront these challenges.

### Adaptation to the post-pandemic tourism market and diversification
- Adapt tourism toward eco-sustainable models: lower density, higher value-added, and greater integration with local suppliers to reduce health risks associated with mass travel.
- Harness the “blue economy” potential by increasing investment in shipping, fisheries, and aquaculture.
- Pursue technological innovation, such as digitalization and fintech, to improve efficiency, reduce cross-border transfer costs, and facilitate international trade.
- Advance regional integration to build greater scale and stronger resilience against future shocks.

*International Monetary Fund.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Post-Pandemic Tourism](https://www.imf.org/en/News/Articles/2021/02/24/na022521-how-to-save-travel-and-tourism-in-a-post-pandemic-world)
- [Small States and Tourism](https://www.imf.org/external/pubs/ft/fandd/2020/12/impact-of-the-pandemic-on-tourism-behsudi.htm)
- [ECCU and the IMF](https://www.imf.org/en/Countries/ResRep/ECC-Region)
- [were among the most affected by the pandemic](https://blogs.imf.org/2020/04/29/covid-19-pandemic-and-the-caribbean-navigating-uncharted-waters/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/03/11/na031221-how-the-caribbean-can-avoid-becoming-a-covid-19-long-hauler_