World’s Worst-Hit Virus Region Offered $500 Million Vaccine Aid
(Bloomberg) -- A key Latin American development bank is helping countries secure Covid-19 vaccines and can deploy about $500 million to fight the pandemic in the world’s most affected region.
The Inter-American Development Bank is in talks with Argentina and Panama and vaccine makers to provide credit for purchases of about $50 million to $100 million for each country, said Mauricio Claver-Carone, president of the Washington-based institution.They would be the first countries to use an IDB initiative rolled out in March to help resolve vaccine indemnity obligations in contract negotiations with vaccine makers.
The IDB so far has used roughly half of the $1 billion announced in December to help nations with their purchase and distribution of doses. The bank already supported Argentina, Belize, Ecuador, and Trinidad and Tobago with advances to buy vaccines through Covax, the World Health Organization-backed initiative for shots for low- and middle-income countries. The IDB’s efforts are focused on small countries or those with the least self-financing capacity.
“We’re still in negotiations with various pharmaceuticals” on the vaccine guarantees for Argentina and Panama, Claver-Carone said in an interview Tuesday. “It’s not an issue of money, it’s an issue of legal details to ensure that it’s done correctly to the satisfaction of all parties.”
Latin America has been among the regions hardest hit by the global pandemic. With only 8% of the global population, it accounts for one-quarter of Covid-19 deaths. In 2020, it was the region that recorded the biggest drop in total wealth, which plunged by 11.4% or $1.2 trillion, according to a Credit Suisse Group AG report.
The International Monetary Fund in April forecast income per capita for the region won’t return to its pre-pandemic level until 2024, resulting in a 30% loss relative to the pre-virus trend.
The IDB launched the guarantee initiative to help countries reduce the potential cost of liabilities for the widespread use of companies’ vaccines, which Claver-Carone said at the time was proving a stumbling block for direct purchases from producers.
Claver-Carone said that the bank previously discussed guarantees for Brazil, which wound up contracting private insurance instead, and Paraguay and Peru, which ultimately didn’t end up needing the IDB initiative. But countries are starting to revisit the issue as vaccine needs increase and direct contracts with the pharmaceutical companies continue, he said.
The IDB in March said that Latin America faces risks as its economy rebounds from the worst downturn in two centuries. While it forecast output to grow 4.1% this year as vaccine rollouts proceed and businesses continue to open, weaker growth in the U.S. and Europe, slower vaccine application and new virus strains could limit the 2021 expansion, the bank said.
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