Latin America and the Caribbean (LAC) face a structural challenge of low economic growth, which threatens the region’s long-term development prospects. The demographic dividend that supported growth over recent decades is fading, and now more than ever, the region must boost productivity and capital investment to sustain economic growth (see Figure 1).
Better information can help Latin America and the Caribbean tackle energy subsidies and make the energy sector stronger.
Many Latin American and Caribbean governments use energy subsidies as part of their anti-poverty efforts. As countries began tightening budgets and reducing debt post-pandemic, these subsidies have come under scrutiny. They are not only expensive but largely tend to benefit individuals who don’t need them while discouraging much-needed investments to modernize the energy sector.
'
One of the defining features of Brazil’s tax system is the complexity of its indirect taxes. Notably, the system is marked by fragmented tax bases, the cumulative taxation at each stage of the production process (known as the cascading effect), and the administrative challenges posed by the jurisdiction to tax consumption of three levels of government— the Federal Union, 27 states, and 5,570 municipalities—each applying different tax bases and rates.
Every year, governments spend billions through public procurement to keep the government running and deliver services that citizens rely on. Yet managing this spending well isn’t just about signing more contracts; it’s about making every dollar count. And that starts with taking advantage with an often-overlooked tool: the reference price.
Tax certainty—the predictability and stability of tax rules—is a critical factor in attracting foreign direct investment (FDI), as it shapes investors’ expectations for returns and long-term engagement.
Over the past two decades, electronic invoicing (e-invoicing) has transformed tax administrations worldwide. This innovative solution was created in Latin America and first launched in 2003 in Chile, and then in Brazil and Mexico. Since then, this digital transformation has significantly increased transparency and tax collection and reduced economic informality in many countries.
There is a widespread belief that fiscal rules hinder public investment. The reasoning is straightforward: to adhere to these rules, governments often must reduce spending, particularly on infrastructure projects, which are not deemed essential in the short term.
Imagine living in a country where storms, floods, or droughts can cause catastrophic damage to the livelihoods of thousands or even millions of people, undermining a country’s ability to grow and maintain its macroeconomic stability. This is the challenge facing several developing countries all over the world, especially in Latin America and the Caribbean (LAC), where countries are increasingly exposed to natural disasters of significant magnitude.
A Medium-Term Fiscal Framework (MTFF) is an institutional framework designed to guide and inform the public about the achievement of multi-year fiscal policy objectives. It uses medium-term macro-fiscal projections and analyses national or subnational public finances. At the core of an MTFF is a medium-term economic and fiscal outlook report, which forecasts the key government revenue and expenditure lines over the coming fiscal years. It also analyzes how the government plans to comply with its fiscal rules and maintain debt at sustainable levels.
Given the increasing fiscal constraints facing Latin America and Caribbean (LAC), it is imperative to adopt smarter, more strategic procurement approaches that reduce waste and enhance the efficiency of public funds, particularly with a focus on mid- and long-term developmental outcomes.Such a strategy could go a long way in helping bridge the financing gap for development.