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Government Response

We are closely monitoring and documenting relief policies relevant for small businesses in North, Central and South America.

Response amount as share of GDP


Policy Summary

Key Policy Responses:

Argentina was one of the first countries in Latin America to mandate nationwide social distancing measures and implement economic relief packages (at an estimated cost of 1.2 percent of GDP). Within those packages, we estimate that half of the budget (around 1 billion USD or 0.6% of GDP) was designated to aid independent workers, informal businesses, and small and medium-sized businesses. The two central economic programs are the Programa de Asistencia de Emergencia al Trabajo y la Producción and the Ingreso Familiar de Emergencia (IFE).

The first policy allocates 30 Billion Argentinian Pesos to the Fondo de Garantías Argentino to back up loans for small- and medium-sized businesses facing liquidity constraints as a consequence of the social distancing measures. The second policy aims to alleviate the economic distress faced by families, workers in the formal and informal sectors and independent workers between the ages of 18 and 65. This stimulus plan provided cash payments of 10,000 pesos to all eligible individuals who subscribed to the program.

The government also allocated resources to increase health care spending, including purchases of hospital equipment and construction of clinics and hospitals; and the uninterrupted provision of utilities to households, independent of the delay in payment for the services.


Policy Summary

Key Policy Responses:

The federal government in Brazil has implemented a number of programs to help firms facing liquidity constraints as a result of COVID-19. The first announcement detailed a R$ 55 billion plan that included R$ 5 billion in loans to small and medium sized firms. The program, BNDES Crédito Pequenas Empresas, intends to offer a fast and flexible line of credit to eligible firms. On April 20, CAIXA and SEBRAE announced a partnership aimed at facilitating access to lines of credit worth R$ 7.5 billion. The latest program, announced on May 19, offers flexible lines of credit to small businesses to cover employee wages, rent, utilities and other operational expenses.

The Programa Emergencial de Suporte a Empregos do BNDES and the Programa Emergencial de Manutenção do Emprego e da Renda offer aid to formal firms to maintain their formal employees. The former offers subsidized loans to cover employees’ salaries, up to two minimum wages, for a period of two months. In exchange, firms agree to keep their employees on payroll throughout the duration of the program. The latter requires an agreement be reached between the employer and employees to reduce the number of hours worked or suspend employment contract.

Workers in Brazil’s informal sector are eligible for a cash transfer, Auxílio Emergencial. Eligible recipients receive R$600 per person for up to 3 months, subject to a limit of two recipients per household. Female heads of household receive R$1,200 per month for the same 3 month period.


Policy Summary

Key Policy Responses:

After the country reported its first COVID-19 case on March 10, the Bolivian government responded with a series of nationwide public health and economic relief measures. These included restrictions on public and commercial activity, the expansion of social safety nets, and a state quarantine to curb the virus’s spread. For Bolivians impacted by the pandemic, the government has provided several forms of assistance. It has subsidized or fully funded expenses related to residential use of water, electricity, and natural gas, while credit payments using the financial institutions across the country have been automatically deferred. Select vulnerable groups (e.g. expecting mothers, persons with disabilities, etc.) are receiving a Canasta Familiar (Family Basket), a cash payment of 400 bolivianos. For families with children in school, the Bono Familia (Family Bonus) was created as a cash payment of 500 bolivianos to cover costs of feeding and caring for their young. To expand the safety net further, those without a source of income and who are ineligible for both the Canasta Familiar and the Bono Familia can receive the Bono Universal (Universal Bonus), a payment of 500 bolivianos. Across the Canasta Familiar, the Bono Familia, and the Bono Universal, the Ministry of the Economy and Public Finances anticipates supporting over 8.4 million people.

On the employment front, the Bolivian government has established the Programa Especial de Apoyo a la Micro, Pequeña Mediana Empresa (Special Assistance Program for Micro, Small, and Medium-sized Businesses) and the Plan de Emergencia de Apoyo al Empleo y Estabilidad Laboral (Emergency Plan to Support Labor Employment and Stability). The Special Assistance Program for Micro, Small, and Medium-sized Businesses will support over 780,000 businesses with a total expected government investment of 1.5 billion bolivianos. The Emergency Plan to Support Labor Employment and Stability has an estimated resource pool of 2 billion bolivianos.


Policy Summary

Key Policy Responses:

Chile has developed a program of economic relief packages targeted at supporting employment in small and medium-sized businesses. On March 19, the government announced a 12.1 billion USD package consisting of three broad measures - one to protect employment in small and medium-sized firms, one to ease their tax burdens, and one to support macro financial policies.

On April 8, a 5 billion USD package consisting of two main policies was announced. The first sought to protect economic activity by providing greater liquidity to companies through loans from the Small Business Guarantee Fund, with an additional $ 3 billion to the Fund. The second policy, estimated at 2 billion USD, was a cash transfer plan to protect the income of the most vulnerable and informal workers. In this context, an Emergency Family Income was released and transferred, which provides resources for three months to families that do not receive formal income. In mid-June, the government announced a new Social Protection and Employment Recovery Agreement, with an estimated cost of $ 12 million for a 24-month projection, which aims to expand social benefits to vulnerable families and workers, and support investment and economic recovery.


Policy Summary

Key Policy Responses:

Colombia announced an ambitious plan of relief measures to provide financial support to micro, small, medium and large businesses. Unidos por Colombia, a program funded by the Fondo Nacional de Garantías (FNG), allocated 16,000 billion COP (around 4 billion USD) of government-guaranteed loans to cover payroll and working capital to eligible businesses and independent and informal workers. Bancóldex, a development bank of the Ministry of Commerce, Industry and Tourism (Mincomercio), made available 15 credit lines tailored to different business sectors to help firms of all sizes cover their liquidity and working capital requirements. Colombia Responde was one of the first lines of credit created by Mincomercio in response to the negative effects to the tourism, aviation, and show industries caused by COVID-19. As the severity of the crisis continued to unfold, Mincomercio decided to increase funding available to businesses by creating a second version of this program, named Colombia Responde para Todos, which supports all sectors. Funding available from both credit lines added up to 600 billion COP (155 million USD). On May 22nd, three of the Bancóldex credit lines ran out of resources: Colombia Responde para Todos, Línea para el escalamiento del Sector Turístico, Línea Colombia Emprende e Innova contra los efectos económicos del COVID19 Coronavirus.

It is worth mentioning that some of the above measures do not apply to businesses in the agricultural sector. These businesses have access to Colombia Agro Produce, a special line of credit launched by the Ministry of Agriculture (Minagricultura) with 1,500 billion COP of available funding (387.6 million USD). On May 6th, the government announced a 40% payroll subsidy for firms.

Dominican Republic

Policy Summary

Key Policy Responses:

The government in the Dominican Republic has implemented a set of economic policies to maintain economic activity while imposing social distancing measures to combat the spread of COVID-19. For small businesses, there are four groups of policy measures: financial support to maintain payroll, tax easing measures, relaxation of credit conditions, and cash transfers for informal and vulnerable workers.

With respect to employee job security, FASE (Employee Solidarity Assistance Fund) is the most important program. Eligible firms in the formal sector who have been directly affected by social distancing measures can have a portion of their payroll subsidized by 90 to 156 USD for each employee. The second group of policies is led by the Dominican tax authority. These are focused on extending the deadlines for reporting and paying taxes to the government, as well as exonerating some sectors affected by the pandemic of some taxes. There are also financial initiatives to support small firms. The Central Bank has announced that USD 274 millions will be available to increase the access of MSMEs to credit; thus, firm owners will be granted grace periods for their credits, lower interest rates, and fewer fees. Finally, the government has temporarily broadened the cash transfer eligibility to include more families in the social safety net program, and has added an extra transfer to the elderly population.


Policy Summary

Key Policy Responses:

On March 10th, President Moreno announced a series of tightening fiscal measures. The package included revenue-enhancing measures as well as expenditure cuts of about 2% of GDP with respect to the 2020 original budget, and some 2.5% of GDP in new financing and refinancing of some current obligations.

On March 19th, further measures were announced to support the population and businesses, such as deferral of payroll contributions, distribution of food baskets, and financing of 50 million USD in credit lines for small and medium-sized businesses. In addition, the government made 950,000 cash transfers of 60 USD to workers earning less than 400 USD monthly.

On March 24th, the Monetary and Financial Policy and Regulation Board issued some temporary modifications to the Monetary, Financial, Securities Code and Insurance Resolutions to support the private sector, including extraordinary deferrals of credit obligations, including from public banks, and a requirement of additional generic provisioning on banks’ gross lending portfolio during 2020.

On April 10th, the government created the Emergency National Funds, where large businesses earning over 1 million USD annually will have to contribute 5% of their profits, and workers with salaries greater than 500 USD will have to contribute a progressive amount.

On May 7th, President Moreno announced the arrival of USD 1.4 billion of loans from international organizations like the World Bank, the IMF, and the CAF. In addition, the IDB delivered to the country USD 700 million, and it also received donations from the USAID and the CAF.

On May 19 Moreno announced seven new economic measures aimed at cutting $4 billion from the national budget. The measures include a required reduction of the work day for most workers, closing or merging of 10 public entities, closing 11 embassies and other diplomatic offices, and restructuring Ecuador’s public debt.


Policy Summary

Key Policy Responses:

The Mexican government has launched few measures to prevent the economic effects caused by COVID-19 on micro and small businesses. Specifically, the Mexican government has bet on reinforcing and continuing existing social programs instead of creating new ones. This is the case of the program “Tandas para el Bienestar” which will invest 3.4 billion pesos to give 450,000 new credits for small businesses and for the youth involved in the program “Jóvenes Construyendo el futuro”. However, it is important to note that small businesses cannot apply for this financial support since beneficiaries are pre-selected through the Census for Welfare, which was implemented before the COVID-19 crisis.

In addition, the Mexican Institute of Social Security (IMSS) is granting 25,000 peso loans at rates between 6.5% and 10% for both formal and informal micro and small businesses. Formal businesses are required to have kept their labor force during the first trimester of 2020 in addition to being registered in the IMSS. Informal businesses are required to be listed in the Census for Welfare. By May 15, the credit line for formal businesses was closed.

The Bank of Mexico announced an injection of 750 billion pesos to the economy to alleviate liquidity needs of businesses through private banking. Finally, government efforts have focused on vulnerable populations such as farmers, older adults, and disabled children.


Policy Summary

Key Policy Responses:

Peru has launched one of the most ambitious relief packages in the region, with appropriations greater than 12% of GDP. The relief measures for medium and small-sized firms include funds to guarantee SME loans, subsidies to cover wages of employees, and measures to relieve the tax burden until the emergency is over.

The first measure was the creation of a 300 million PEN (90 million USD, augmented to 800 million PEN because of high demand) to guarantee SME loans for working capital ([Fondo de Apoyo Empresarial, FAE-MYPE] ( The fund will provide guarantees for 16 financial institutions to give out loans to SMEs for up to 90,000 PEN (27,000 USD) (later modified: loan amounts only up to 30,000 PEN), with a repayment term of 36 months and a grace period of 12 months. The guarantee for individual credits can range from 30% to 70% depending on the size of the borrower’s portfolio (later modified: guarantee ranges from 90% to 98%).

This policy was complemented by a subsequent relief package called Reactiva Peru, a 30 billion PEN (9 billion USD) fund to guarantee working capital loans. This is the largest guarantee fund in the country’s history and is equivalent to 4% of GDP. In May, one month after its original announcement, the funds committed were duplicated, to arrive at a total of 60 billion PEN (17.5 billion USD).

As a third relief policy, in April the government is granting a subsidy to cover 35% of wages for employees in the formal private sector (). This subsidy applies for employees who earn a gross monthly salary of 1,500 PEN (450 USD) or less. More recently, they also announced that the government will pay for social security expenses of workers under Suspensión Perfecta de Labores (temporary suspension of workers’ contracts).

Related to taxes, the government has postponed from March to June the annual deadline to declare and pay taxes for all firms that had revenue below 21 million PEN (6 million USD) in 2019. It has also suspended all tax-related sanctions during the emergency period, and is providing flexibility to refinance current tax debt. Finally, it has opened the possibility to withdraw funds from tax withholding accounts.