How will Latin America’s covid-19 bill be paid?

THE TIMING could hardly be more awkward. Colombia is suffering a third peak of covid-19, even more deadly than its predecessors. Almost all intensive-care beds in the main cities are full, and oxygen tanks are running short. Bogotá, the capital, is under a red alert, with the working week cut to four days and a curfew at 8pm. Yet in April the government of President Iván Duque sent a bill to Congress proposing stiff tax rises. Although the increases would be phased in, the government thinks it must signal now its intention to raise more revenue, particularly if it is to provide emergency aid to its people until the pandemic is over. Many of the country’s politicians disagree, and the bill was the target of a large national protest on April 28th.

Colombia is an early example of the fiscal dilemmas Latin American governments will soon face. The region has suffered grievously in the pandemic. Its economy shrank by 7% last year, more than double the average contraction around the world. As lockdowns eased a couple of months ago, there was optimism that recovery might exceed the 5% growth of most forecasts. But then the P.1 variant of the virus, first detected in Brazil, began to run wild. Like Colombia, other South American countries have been forced to restrict movement yet again. Meanwhile vaccination is happening slowly. The result is that 2021 is shaping up to be another difficult year.