Despite five years of sustained economic growth averaging five per cent, the region could not escape the effects of the global financial crisis.

Even if it does not experience a recession like much of the rest of world, the blow will be felt. This upcoming year's growth is likely to shrink to close to two per cent.

Before the downturn, for the first time in 30 years, several countries were able to make significant progress in reducing inequality.

For Brazil, Chile, Argentina, El Salvador, Colombia and others, poverty was reduced in part due to the fiscal space provided by improved macroeconomic policy and social spending focused on those who needed it most.

This new emphasis on social issues was made possible by countries' solid fiscal and macroeconomic policies that resulted in budget surpluses, never-before-seen increases in international reserves and lower inflation rates.

But when a European or Asian importer is unable to purchase the region's raw materials, and at the same time the price of exported goods is falling, the poor and vulnerable are the first to feel the pain.

After the recent food and energy crises made food on families' tables prohibitively expensive, the most vulnerable sectors now must deal with a phenomenon that is not a product of their own countries, but which does affect them directly.

protection networks

Fortunately, governments in the region realise that now is the time to act. In countries where strong social protection networks exist, such as Brazil with the 'Bolsa Familia', Mexico with 'Oportunidades', and El Salvador, Panama, Jamaica, and Colombia, the financial crisis need not become a social crisis if additional funding is provided.

This would protect the progress made in social and human development in these countries over the past years by preventing many people from falling back into poverty.

While rich countries continue to prepare financial packages to stimulate their economies, the region should - using its own funds or with assistance from cooperation agencies - prioritise those packages with strong social considerations to avoid backsliding on poverty indices.

In Latin America and the Caribbean, social protection networks represent a solid foundation upon which a broader platform can be built to cover the most vulnerable population and to protect the human development progress already achieved.

After nearly a decade of experimentation, conditional cash transfer (CCTs) programmes are now established as public policy in the region.

Through them, the head of the household commits to send his or her children to school and receive medical services on a regular basis in exchange for support cash transfers. CCTs have allowed millions of people to improve their economic status.

They have provided many young people with better services and education, and thus they are better prepared to enter into the labour market.

By supporting the most vulnerable sectors with CCTs, government and individuals work together in the fight against poverty.

most vulnerable

CCT coverage and services now must be expanded to cushion the impact that this crisis will have on the most vulnerable.

In fact, many of the social protection networks in the region and their capacity have grown mainly through CCT programmes developed in response to the previous financial crisis at the beginning of the decade.

The World Bank has supported these programmes actively and today provides over US$2 billion to implement them in several countries.

In countries where social protection systems already are established public policy, work is underway on second-generation programmes that use CCTs to support job-training services and the labour market.

In other countries, like Guatemala and Bolivia, new programmes targeting prevention of malnutrition among indigenous populations have been launched, and in Haiti a programme providing school lunches is underway.

Timing is essential. Experience shows that in times of crisis, public spending for emergency social networks must be expanded sooner rather than later.

In this manner, we will be better prepared for the storm's aftermath and ready to resume a vigorous agenda to reduce the social gap separating the rich from the poor in Latin America and the Caribbean.

Pamela Cox is the World Bank's vice-president for Latin America and the Caribbean.

acedeno@worldbank.org