U.N. Secretary-General urges debt help to avoid 2021 “crisis” 

By Aaron Humes: Secretary General of the United Nations (UN), Antonio Guterres, told members of the Central American Integration System (SICA) in a virtual summit that significant measures are needed to avoid a “crisis of sovereign debt” in 2021 as Central American economies rebound from both natural disasters and COVID-19. 

Guterres appealed for the support of multilateral financial entities such as the International Monetary Fund (IMF) and the World Bank (WB), as well as the countries of the Group of Twenty (G20) to delay debt collections until the end of 2021. 

This, he said, would allow poorer countries the opportunity to concentrate their resources on fighting the pandemic and protecting the lives and livelihoods of their most vulnerable populations, according to the World Bank. 

Guterres also called on the IMF, the World Bank and the G20 to “consider the possibility of granting greater relief, including debt cancellations,” to Latin American countries, including middle-income ones. 

According to Guterres, the impact of the new coronavirus pandemic “will significantly widen the financing gap” in Latin America and the Caribbean, which could lead to “a major liquidity crisis” — that is, lack of money for the economy to continue its usual pace. 

The president of Honduras, Juan Orlando Hernández, assured on Twitter that, during the meeting, he asked Guterres to recognize Central America as “the region most affected by the effects of climate change” given the recurring damage it suffers from natural phenomena. 

For its part, the government of Guatemala reported that President Alejandro Giammattei and his peers raised the possibility of accessing the Green Climate Fund to rebuild the areas hit by hurricanes Eta and Iota, which left some 200 dead and millions in losses in the region. 

Designed to be a financing mechanism for the United Nations Framework Convention on Climate Change (UNFCCC), the Green Fund was created to support the efforts of developing countries to limit or reduce their emissions and help them adapt to the effects of climate change. 

In the same vein, the president of Costa Rica, Carlos Alvarado, urged Central America to form a united front to seek financing in order to help the region’s countries avoid a “health, economic and climate crisis.” 

The meeting was organized by SICA General Secretary, Vinicio Cerezo, on behalf of its members: Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Belize and the Dominican Republic. 

Belize has an estimated $150 million loss in damages from the floods caused by Eta and Iota, added to damages from Hurricane Nana in September and the more-than-$300 million-hole in the Budget due to reduced revenues from COVID-19. The national debt is at or near $4 billion. 

New Prime Minister John Briceño said recently that Belize’s debt-to-GDP ratio was near 130 percent due to consistent domestic and international borrowing by the previous administration, and worries of further deferments on the Superbond have caused Moody’s investment firm to downgrade its status to mere steps above default. 

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