(24 January 2012) Today, the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, said that, "in Latin America and the Caribbean, the investment ratio is not enough to maintain high growth rates. There are mainly gaps in infrastructure. Unfortunately, investment has been one of the adjustment variables in previous crises."
The high-level representative opened the XXIV Regional Seminar on Fiscal Policy, which will take place until Thursday 26, at the headquarters of the Organization in Santiago, Chile. Apart from Ms. Bárcena, other speakers during the first session included, Adrienne Cheasty, Deputy Director of the Fiscal Affairs Department of the International Monetary Fund (IMF), Mario Marcel, Deputy Director for Public Governance and Territorial Development of the Organization for Economic Cooperation and Development (OECD), and Sergio Wulff Gobetti, from the Ministry of Finance of Brazil.
The speakers agreed that Latin America is currently in a privileged situation in the midst of the crisis which some countries in Europe are facing. They highlighted in particular the control of public finances and debt sustainability, regional assets which must be maintained, they stressed.
"The quality of public finances has improved in Latin America," said Ms. Bárcena. "Public debt has been significantly lowered and its profile and composition are more balanced, tax revenues and the average tax rate increased, the decrease in interest payments has created significant fiscal space and social public spending has been maintained," she said.
However, "investment in Latin America and the Caribbean is not only highly volatile, but during economic upturns it is also unable to recover from its fall during the downturn. Private investment has not been dynamic and public investment has been declining," stated the Executive Secretary.
She highlighted that in Latin America gross fixed capital formation represents almost 20% of gross domestic product (GDP), while in some countries in Asia Pacific it reaches 40%.
According to Ms. Bárcena, investment in the region should be aimed at improving infrastructure, increasing research, science and innovation, promoting banking institutions for development and developing cleaner matrices from an environmental perspective.
Ms. Bárcena urged the countries of the region to consolidate a "sustainable and at the same time stabilizing" fiscal policy, with a low debt-GDP ratio in good times and counter-cyclical expenditure policies during recessive phases.
Fiscal policy must contribute to long term economic growth through stable investment in physical and human capital and innovation. It must also have a redistributive impact, which includes progressive tax rates, she indicated.
The Fiscal Observatory of Latin America and the Caribbean (OFILAC), which aims to contribute to the improvement of fiscal policy in the region through the dissemination of studies and debate with different actors participating in this area, was launched as part of the seminar.
OFILAC is an ECLAC initiative which involves the participation of OECD, the Inter American Center of Tax Administrations (CIAT) and the Institute of Fiscal Studies (IEF). It receives support from the Spanish Agency for International Cooperation and Development (AECID), and the German International Cooperation Agency, GIZ (Deutschen Gesellschaft für Internationale Zusammenarbeit).
The website for the Observatory, which contains news, activities, statistics and publications on the current fiscal situation in Latin America and the Caribbean, is aimed primarily at economic authorities, international officials, academics and students.
The XXIV Regional Seminar on Fiscal Policy is organized by ECLAC, through the Latin American Institute for Economic and Social Planning (ILPES), with support from IMF, OECD, the World Bank and the Inter-American Development Bank (IDB), under the auspices of the German Federal Ministry for Economic Cooperation and Development (BMZ).
Any queries should be addressed to the ECLAC Public Information and Web Services Section.
E-mail: dpisantiago@cepal.org ; Telephone: (56 2) 210 2040.
