Government created a special commission called Comisión Especial de Supervision y Control de Compras (CESC) to avoid influence peddling and corruption related to the purchase of medical equipment in the context of the coronavirus pandemic. The commission works with the tax authority for cross-checking.
The government has also cut wages and other benefits from the public sector and Binational entities (Itaipu and Yacyreta hydroelectric dams) as part of the measures to mitigate the impact from the coronavirus crisis and redirected proceeds to the Ministry of Health.
Smart Quarantine Phase 1
Phase 1 begun on May 4 and will continue until May 25. In this phase, 58% of the country´s economy returned to its business activities. The rest of the residents may only leave their homes to purchase groceries and medicine on certain days depending on the number of their license plates. The individuals and companies that are exempted from the lockdown in the phase 1 include: authorities fulfilling their duties, public and private health services providers, doctors and nurses, police and military, journalists; supermarkets and the logistic chain for the provision of food, medicine and hospital tools; funeral services with restrictions, basic public services, execution of public sector construction; execution of private sector construction specifically in the foundation, infrastructure and lifting masonry stages; gas stations, delivery services; services that the Central Bank deems necessary for the function of the banking and finance system; logistic chain that includes ports, airports, river ships, maritime and land freight transportation, customs services for loading and unloading merchandise; agricultural, poultry, fishing and forestry production, as well as the logistics for the provision of supplies, machinery and their assistance services; essential services of surveillance, cleaning and accommodation; Industries such as: manufacture of household appliances, cleaning articles and hospitable supplies; textile, clothing and leather production industries; manufacture and production of wood, furniture and paper; metal, plastic, ceramic, cement and glass factories; printers; machinery and automotive factories (maquila); maintenance of factories and mechanical workshops, masonry; professional and nonprofessional services that can be performed in the clients home or workplace and collection services. Those individuals included among the exceptions must comply with COVID-19 protocol (must not be in the risk group, social distancing, hand sanitizing and wearing masks).
In general, the population has willfully complied with the quarantine measures and those that haven’t have suffered penalties.
One of the sectors that will not resume activities immediately is the education sector. Schools will not resume before September 1, if at all in 2020.
A usually divided Congress approved emergency legislation (Covid-19 Health Emergency Law) that included authorizing $ 1.6 billion for COVID related projects, social subsidies and designed to inject liquidity into the economy. The World Bank suggested that the global recession is likely to lead to a Gross Domestic Product decline of 1.2% this year.
There are several subsidies in place. Programs, called Ñangareko and Pytyvo, aim to benefit the informal worker sectors with a two-time payment of USD 80 subsidy per family. The subsidy for formal workers will be provided by the Instituto de Prevision Social (IPS) who oversees the mandatory health and retirement program of formal workers. IPS received USD 100 million from the government to pay for financial compensation of USD 172 to workers whose employers have ceased or suspended their activities due to the pandemic. The compensation will be a one-time payment to workers who earn up to two minimum monthly wages (approx. USD686). This subsidy will reach approximately 505,000 workers.
Within the Covid-19 Health Emergency Law, two mechanisms were established to reach the micro-enterprise and small business sector with loans at low rates and flexibilities. One of the main tools is the increase of funds for the Fondo de Garantías a las Pymes (Fogapy) which has an additional USD 100 million, that translates into credit possibilities of up to USD 500 million.
Through Fogapy, a financial instrument, banking entities can request the government the necessary guarantees to offer loans to Small and Medium-sized Enterprises (SMEs), reducing the normal time to access to loans in the financial market.
The second mechanism established is the creation of a trust fund especially aimed at the micro-enterprise sector. This trust covers startups that take loans between USD 2000 to USD 8000 to be offered through credit and production cooperatives.
The law authorized the Executive Power to rule for the extension of deadlines for filing tax returns and payment for 2019 and 2020 periods. On the other hand, the law suspends the application of new tax refunds of tax credits, as well as the resolution of those that are in process.
The Ministry of labor has passed several regulations and recommended companies to allow employees to work remotely, allowing employers the possibility to grant advance vacation days to employees and reduce hours of work in agreement with employees. The government encourages companies, when necessary, choose to suspend employment over terminating. Employers may suspend employment agreements on several grounds as established in the Labor Code including “force majeure”. The maximum term for suspension is of 90 consecutive days.
All workers must comply with the mandatory lockdown, except for those who have been named as exceptions by law. In this case, authorized workers must carry a work certificate issued by the employer and present it at checkpoints and they must necessarily wear masks on public transportation. Masks must be provided by the employer. At the workplace, employers have the overall responsibility of ensuring that all practicable preventive and protective measures are taken to minimize health risks. Workers in the risk group (over 60 years, pregnant or lactating mothers, those with severe respiratory diseases and underlying diseases) are not allowed to work, except from home.
The logistic chain that includes ports, airports, river ships, maritime and land freight transportation, and customs services for loading and unloading merchandise are among the exceptions to the lockdown. Moreover, the competent authority overseeing these sectors have taken measures to deal with the Covid-19 situation. The Merchant Marine has provided exceptional measures to enable private ports, vessels and maritime related industries to work during this period and the Coast Guard has extended the validity of all statutory certificates that were to expire, until June 30, 2020.
As another measure to mitigate the Covid-19 outbreak, all Reinsurance Licenses validity have been extended until June 30, 2020. The obligation of Insurance Companies to set accounting provisions called “debtor for premiums” has been suspended until June 30, 2020.
Courts will resume activities on phase 1: on May 4 the Supreme Court, Courts of Appeal, Tax Courts, and on May 18, first instance courts and sentencing courts.
The Ministry of Health has been calling the shots and with the early lockdown has kept a low number of COVID-19 infections and deaths (788 infected and 11 deaths until yesterday). A certain under-reporting exists, but the absence of healthcare systems saturation indicates there is currently no exponential community transmission. However, there are problems in purchasing and receiving ventilators and general protective equipment for medical personnel. On a more positive note, two contingent hospitals with 100 beds each, have been built in record time.