By Alfredo Suárez Mieses, Secretary-General, Central American Social Integration Secretariat (SISCA), and Gabriela A. Ramírez Menjívar, Head of the Multidimensional Poverty, Human Capital Development and Social Protection Area- SISCA
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
The COVID-19 pandemic is causing an unprecedented health, economic and social crisis that threatens to leave a deeply negative mark in the SICA region (Central America and Dominican Republic), particularly on employment, poverty, and inequality levels. The depth of the impacts will depend on multiple factors, including the duration of the pandemic, the public policy responses to contain and control it, a country’s economic structure, the strength of its health and social protection systems, and its level of vulnerability to global dynamics. Social protection is a crucial tool to minimize the costs of the crisis; it is also a crucial investment to make the recovery stronger and more inclusive, thus more sustainable.
Measures taken by most countries to flatten the contagion curve, along with the current international environment, have impacted economic activity with direct effects on income generation and living conditions for a large part of the population. According to the latest report of the Central American Economic Integration Secretariat (SIECA), the region’s Gross Domestic Product will contract by 6.8%. The fall in tourism and decline of economic activity in the United States, the main trading partner and the largest source of foreign direct investment and remittances in Central America, are already having negative effects. The Inter-American Development Bank (IADB) estimates remittances could contract by 10% for each point less of growth in the United States.
The crisis has struck the region at a time of economic and social instability and deep unresolved problems such as high levels of poverty, social inequality and the informal economy, along with highly limited fiscal space. In this context, countries are having to find ways to efficiently and effectively serve the most vulnerable populations and guarantee minimum conditions for their survival. Here is where social protection becomes a fundamental instrument: a response to protect the poorest and most vulnerable population who in the absence of social protection would face loss of livelihoods, lower incomes, higher risks of getting sick, education lag and heightened food insecurity and malnutrition.
Most of the countries in the SICA region have already put in place emergency measures and economic mitigation responses, using existing social protection systems. Some measures include the expansion of social programmes and the incorporation of new beneficiaries. The Dominican Republic for example announced a two-month prolongation of “Comer es Primero” (a conditional cash transfer programme that provides financial assistance to each head of a household in poverty to purchase food), that helps 811,000 “Tarjeta Solidaridad” cardholder families to acquire food and basic necessities. In April-May, families have received approximately USD 90 per month. Moreover, an additional 690,000 families categorized as vulnerable poor have started to benefit from the country’s single beneficiary system SIUBEN.
Likewise, conditional transfer programmes have been maintained or expanded. Guatemala enabled the delivery of temporary cash transfers to elders and children (a total of Q350 million or USD 46 million) and Belize is delivering cash transfers to workers who have lost their jobs – a total of BZ$ 25 million (USD 12 million).
After closing schools due to the pandemic, Costa Rica has adjusted its school feeding programmes, adopting a home delivery mechanism that guarantees compliance with the programme’s objectives. The Costa Rican government has also included another 56 measures derived from its social protection platform coordinated by the Joint Social Welfare Institute (Instituto Mixto de Ayuda Social, IMAS). Furthermore, countries have taken measures to ease the burden of payments for services. El Salvador and Panama for example, have granted subsidies or moratoriums on payments for a number of services such as housing, electricity, water, and communications.
Countries’ main focus has been on implementing measures to strengthen their health systems to face a possible influx of infections. Some governments have announced the construction of new or temporary hospitals (Dominican Republic, El Salvador, Costa Rica, Guatemala, Nicaragua and Panama), and many have expanded social insurance coverage to include the treatment of those affected by COVID-19.
These responses, although faced with the challenges of insufficient funding, are steps in the right direction according to Prat and Garcimartín. They show that protection systems are key levers for countries’ social reconstruction; they contribute to reducing social and economic risk, vulnerability, extreme poverty and deprivation, through an equitable approach sensitive to differences and inequalities among populations.
This crisis has also come to highlight the importance of multilateralism to combat the pandemic and the need to strengthen sub-regional integration spaces. Efforts made by countries in the field of social protection are also being supported through regional integration, led by the Central American Social Integration Council (CIS) and its technical instance of support, the Central American Social Integration Secretariat (SISCA). A Recovery, Social Reconstruction and Resilience Plan will strengthen national social protection efforts, productive inclusion and recovery of livelihoods, as well as job creation and employability, and the promotion of healthy resilient habitats.
The reality in which we live places greater emphasis on the need to jointly and creatively address intersectoral challenges that do not respect borders. The governments of the SICA region have the obligation to jointly manage the pandemic response through coordinated action and pooling efforts and resources to first mitigate the ravages of the health crisis, and then, to prepare ourselves to face its many consequences. Investing in social protection systems must be part and parcel of the COVID-19 response. It is not only necessary to contain the immediate impact of the crisis on poverty and inequality; it is crucial to “build back better” our economies and societies, and make them more inclusive and less vulnerable to future threats. We have the evidence to show that investing in social protection is investing in inclusive growth. We have increasing evidence of how to extend social protection systems, including to informal economy workers. The time to invest in social protection is now.