MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador on Friday vowed to inject around $2.5 billion into the economy in May to mitigate the effects of the coronavirus pandemic, as critics bemoan his government’s modest efforts to protect businesses and jobs.

FILE PHOTO: A man walks down Regina Street amid the outbreak of the coronavirus disease (COVID-19), in Mexico City, Mexico April 15, 2020. REUTERS/Gustavo Graf

Latin America’s second largest economy had already tipped into recession in 2019 and the coronavirus has stoked fears of a much sharper downturn this year that could lead to firms going out of business and massive job losses.

“We already have the plan and it basically consists in allocating more funds for the benefit of the people, strengthening all the welfare programs,” Lopez Obrador told a news conference.

The leftist leader has focused his coronavirus response on shielding the poor during the economic slowdown, saying that many in Mexico are living a hand-to-mouth existence.

Lopez Obrador said 3 million loans would be issued for small businesses in the formal and informal economy next month.

“We are going to distribute around 60 billion pesos ($2.5 billion) in May,” he said, without specifying how.

Eschewing major stimulus packages floated elsewhere, Lopez Obrador pitched a frugal economic support plan, vowing to take a pay cut and increase public sector austerity.

Swiss bank UBS forecast has forecast a sharp Mexican recession this year and called Lopez Obrador’s coronavirus response “among the weakest anywhere in the world.”

“There are many ideas on the table, but the only ones that are accepted are those in the ‘non-plan’ plan,” said one government official, who asked not to be named.

“We’ve been working on countercyclical measures but they are all rejected when they get to the top,” said the official.

Mexico’s finance ministry declined to comment.

Business groups and analysts have criticised Lopez Obrador for his package, which lags behind the government spending in other G20 nations.

The Business Coordinating Council, an association representing the private sector, warns that without government support the economy risks contracting 7% this year and shedding between 1 million and 1.2 million jobs.