Subnational fiscal policy and management
Política y gestión fiscal subnacional

What do we do?

Latin America and the Caribbean (LAC) has more than 17,500 subnational governments, responsible on average for around 25% of total government spending. The subnational governments of LAC, through states, provinces, or departments (intermediate level) and municipalities (local level), are the levels of government closest to what the population needs and demands, responsible for crucial services for citizen well-being, such as the provision of electricity, water and sanitation, transportation, waste collection, improvement of public space, and in many countries in the region, the provision of education, health, and safety services. 
The focus of our work is to strengthen the coordination between levels of government and the capacities for the efficient, equitable and transparent provision of subnational public services, which contributes to the improvement in the quality of life of the entire population. We also seek that subnational governments increasingly incorporate the pillars of the IDB's Institutional strategy into their management, addressing the challenges of climate change, reducing gender and diversity gaps in the territory, incorporating digitization into public management, simplifying procedures, and developing services that attract private investment.

Action areas

  • Strengthen the institutions responsible for coordinating fiscal relations between levels of government
  • Improve the definition and financing of the spending functions of subnational governments.
  • Promote the fiscal autonomy of subnational governments through the allocation of their own sources of income
  • Improve the design of transfer systems based on objective indicators and incorporating fiscal equalization criteria, seeking to cover subnational fiscal disparities
  • Promote fiscal rules that function as early warning systems, preserve subnational fiscal responsibility, and help prioritize public investment in budget allocation
  • Strengthen subnational fiscal transparency, to provide complete, clear, and timely information on budget execution and subnational indebtedness
  • Improve the efficiency of spending and subnational services, strengthening the management capacities of administrative systems (personnel, purchases, subsidies, and public investment, among others)
  • Modernize public financial management, including management for results and the allocative efficiency of spending
  • Promote the mobilization of sub-national own income and the access of sub-national governments to financing within a framework of fiscal responsibility
  • Improve transparency and accountability in subnational public management
  • Support the incorporation of the pillars of Vision 2025 in the management of subnational governments related to climate change, gender and diversity, digital management and attraction of private investment


Strengthening development and subnational fiscal management in Uruguay

Strategic asset management to boost strategic subnational revenues