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News from 2021-12-15 / KfW Development Bank

Corona assistance for Latin America

KfW provides more than EUR 500 million to combat the pandemic and its consequences

Overview of San Salvador
In the big cities of Latin America, it becomes evident that health care, social and economic security systems are reaching their limits due to the corona crisis.

Almost all Latin American countries have launched economic and social aid programmes to cushion the impact of the pandemic. This is pushing them to the limits of their capacity. KfW is supporting the Latin American countries in these efforts on behalf of the German Federal Government by providing Peru with a promotional loan of up to EUR 350 million and the Latin American development bank Cooperación Andina de Fomento (CAF) with a loan of EUR 155 million on subsidised interest terms.

The pandemic has hit this region particularly hard. The countries of Latin America and the Caribbean count more than 44 million infected and almost 1.5 million dead so far, about half of them in Brazil alone. The region represents only 8.4 percent of the world's population, but accounts for a good quarter of the global death toll. The health systems of the Latin American countries are reaching their capacity limits or are already overloaded. Shortcomings in health care that already existed before the pandemic are now becoming visible.

Due to lockdowns, collapse of tourism and decline in foreign remittances (in some countries), the economy has slumped in 2020. Unemployment has increased by up to ten percent. Poorer people in particular, who have hardly any access to health services and, moreover, often work in the informal sector without any security, are disproportionately affected.

Flexible credit programme

Within the framework of the Corona Emergency Programme of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW supports Latin American countries in their efforts to stabilise health systems and the economy and to prevent millions of people from sliding into poverty. In November a contract was signed to grant CAF a low-interest loan of up to EUR 155 million.

The Corporación Andina de Fomento (CAF) is a multilateral financial institution that promotes the sustainable development of its members, regional integration and poverty reduction. Its members are 17 countries in Latin America and the Caribbean as well as Spain, Portugal and 13 Latin American private banks. The KfW loan enables CAF, for its part, to grant favourable loans to states and institutions in the member countries. The aim is to stabilise and strengthen national health systems that have been overburdened by the pandemic. To enable CAF to respond to the individual needs of the borrowers, the loan is deliberately designed to be flexible and can also be used in the future to provide assistance to the economy and the population.

Mitigating the pandemic in Peru

In mid-December KfW also signed a contract on behalf of the BMZ for a promotional loan of EUR 350 million to Peru. The Peruvian national budget is heavily burdened by the additional costs of fighting the pandemic. The low-interest promotional loan is intended to provide financial support. The government has already taken measures in three areas. Aid programmes serve to expand the capacities of the health system, to maintain the liquidity of enterprises, which are to get better access to credit, and to protect poor households. These receive food aid and income support.