In this context it is expected “Low growth rates of 1.6% and 2.3% in 2023 and 2024, respectively”Similar to the low levels seen in 2010 and Insufficient to achieve significant progress in poverty reduction”.
“Most economies have reached their pre-pandemic levels, but this not enough, Countries in the region have the opportunity to rebuild better after the crisis and achieve a fairer and more inclusive society. Carlos Philippe JaramilloWorld Bank Vice President for Latin America and the Caribbean. The director stressed that “in addition to implementing the necessary reforms and investments to accelerate growth”Governments will face structural costs: years of schooling lost, vaccines not provided and the delayed effects of food insecurity that the recovery of GDP masks”.
The report assesses that the sector is in a good position to rethink its growth trajectory. Employment practically recovered to its pre-pandemic levels, schools reopened and, with exceptions in the Caribbean, high rates of vaccination against COVID-19 allowed a return to normalcy.
However, it recognizes that the consequences of the crisis remain and must be addressed. Although poverty fell from 30% in 2021 to 28.5% in 2022, it remains high; Pointing out that the long-term costs of the crisis in health and education must be addressed urgently, to reactivate growth and reduce the increase in inequality.
public spending savings
“Creating enough financial space to make growth-promoting investments while managing the growing debt burden arising out of the crisis requires new sources of revenue, which will need to be carefully analysed, as well as existing spending. Gotta use better. On average 17% of public spending can be saved And, in two-thirds of countries, these savings will serve to eliminate the current fiscal deficit”, he affirmed. William F. maloneyChief Economist of the World Bank for Latin America and the Caribbean.
The report argues that countries should carefully analyze their public spending and tax policy choices to promote equity and avoid potential adverse effects. This includes improving spending efficiency: “On average, 4.4% of GDP – or 17 percent of public spending – is wasted on misdirection, poor public procurement, and inefficient human resource policies”,
Analyzing the tax situation of the region, the report considers that there may be room for additional VAT increases in terms of VAT in some countries – such as Bolivia, Ecuador, Mexico, Paraguay and most Central American countries that are relatively cost-free, “While in Argentina and Uruguay – and to a lesser extent in Brazil and Colombia – these will certainly have a negative impact on development”,
The report specifies that in Argentina, along with other Latin American countries such as Brazil and Ecuador, the gross tax burden varies between 30% and 35% of GDP, thus approaching levels seen in the OECD. . In other countries such as Costa Rica and the Dominican Republic, the total tax burden is around 15%.