December 12, 2024
The 2024 Latin American Economic Outlook (LEO) emphasizes that Latin American and Caribbean (LAC) countries need to enhance tax collection, optimize public spending, improve debt management, and attract more private investment to finance their ambitious development goals. The report highlights a sustainable financing gap of USD 99 billion annually, which can be bridged through better coordination between public and private sectors, with international support.
Key challenges include weak productivity growth, with average labor productivity at just 33% of OECD levels in 2023, and persistent poverty, affecting 27.3% of the population. Extreme poverty remains high, impacting one out of ten (10.6%) Latin Americans and Caribbeans.
To address these issues, the report suggests several priorities:
1. Tax Reform: Increase tax revenues (currently averaging 21.5% of GDP) and adjust tax structures to reduce inequalities, support the green transition, improve health outcomes, and foster entrepreneurship.
2. Efficient Spending: Optimize budget allocation and increase spending efficiency, as current expenditure is heavily focused on wages and transfers.
3. Debt Management: Strengthen fiscal frameworks to maintain sustainability, as debt service costs have risen significantly.
4. Financial Market Development: Deepen financial markets and encourage innovation to channel more private resources towards development goals.
5. Production Transformation: Promote sustainable growth and competitive sectors by increasing private sector participation and enhancing capital market liquidity.
These strategies will collectively aim to drive sustainable development, enhance financial resilience, and promote inclusive growth across the LAC region.
Source: (Caribbean News Global)
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