Closing Remarks by José Manuel Salazar-Xirinachs, Executive Secretary of ECLAC
XXXV Regional Seminar on Fiscal Policy
Wednesday May 17, 2023
It was a most opportune opportunity to meet again at the Thirty-fifth (XXXV) Regional Fiscal Policy Seminar to share experiences of governance and fiscal policy challenges in these complex times
I reiterate our gratitude to our ally, the Spanish Cooperation, for supporting this seminar many years ago.
We also thank the international organizations that have worked with us now, as on other occasions: the Inter-American Development Bank (IDB), the Organization for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF).
We begin by acknowledging several realities on which we have broadly agreed:
- The global and regional macroeconomic environment is complex and this makes it difficult to conduct macroeconomic policies with delicate balances and decisions.
- That the debt of most countries has risen to high levels
- That the fiscal space is reduced, also in most countries
- Financing costs have increased
And unfortunately, these limitations on growth and development appear not only in the context of a short-term economic slowdown, but also with the endemic problem of mediocre growth in the region since at least 2014, making it difficult for us to finance this There are many needs and we must therefore consider growth promotion as an integral part of fiscal policy and not as an external datum.
At ECLAC, we are committed to promoting fiscal policies that help boost growth and sustainable development in the region. This requires an update of fiscal compacts based on a fiscal sustainability framework that is simultaneously focused on strengthening revenues and better resource utilization on the expenditure side.
I would like to recap the most important moments of this seminar.
- On Monday afternoon we had a meeting of the ministerial authorities presenting the proposal for a regional tax cooperation platform promoted by Colombia, Chile and Brazil, with the support of ECLAC as technical secretariat. It was very important to listen to countries’ positions in order to strengthen the design of this platform. From ECLAC we will give every possible support to achieve its success.
- On Tuesday, we began presenting the report “Public Debt and Development Constraints in Latin America and the Caribbean,” noting that the rise in debt servicing, particularly due to higher interest payments, is forcing countries to allocate more and more public funds to improve debt sustainability ensure that public investment and social spending are forgone, to the detriment of inclusive, sustainable and sustainable growth. That is why we at the United Nations and ECLAC are working on options to expand financing and transform the international sovereign debt architecture, areas of the international agenda that are critical to promoting inclusive and sustainable development and able to be moving forward SDGs.
- At the international organizations meeting, we analyzed different options that the countries of the region could consider to strengthen tax collection and the progressiveness of the tax structure, as well as improve the quality of public spending to improve its effectiveness.
- The importance of strengthening public revenues was highlighted in both the Latin America and the Caribbean 2023 Fiscal Panorama and the Latin America and the Caribbean 2023 Tax Statistics. In the relevant session yesterday afternoon, we saw that the average tax collection for the region as a whole in 2021 returned to pre-pandemic levels, reaching 21.7% of GDP, but still the region is well below the OECD level of 34.1% of GDP.
- Yesterday afternoon we also talked about new sources of sustainable and green finance, such as bond markets linked to climate, social and governance (ESG) goals. Yesterday it became clear that it is of fundamental importance that the debt management strategy fully integrates new sources of finance to face climate change and promote sustainable growth through thematic bonds (green/social/sustainable).
- This morning we had excellent sessions on income and expenses.
- On income, we had a very detailed discussion on the need to consider income tax reforms, including a review of statutory marginal tax rates, tax bases, the treatment of different types of income, and stricter taxation of high-income individuals and more large wealth . I really enjoyed Héctor Villarreal’s excellent and very useful contribution to the six fundamental discussions around the challenges and needs of public revenue in the long term.
- And in the last session, we analyzed the importance of improvements on the public spending side from a strategic perspective, to improve their effectiveness in reducing the social gap in poverty, education and health and in boosting economic growth. We hear about the major and very unfortunate gaps highlighted by Leonardo Garnier in education, such as the region investing one-sixth per student what OECD countries are investing.
In short, we have covered many issues that are critical to both addressing the short-term complexities and enabling fiscal policy to contribute to the necessary shifts in development models over the longer term, considering both growth aspects and consideration changing demographics and the imperative to promote inclusion and reduce the inequality that is so damaging to social compacts.
Therefore, I would like to thank all the speakers who gave us such quality information and ideas in their contributions, the authorities and specialists who accompanied us and, more generally, all the participants of this regional fiscal policy seminar who helped to enrich this dialogue .
This event would not be possible without the commitment of many ECLAC colleagues. With that in mind, I would like to thank the directors and directors who moderated the sessions, the conference unit, the technical team in charge of audio, zoom and live transmission, as well as the interpreting team and our publications department.
A very special thanks goes, of course, to all the colleagues in the Economic Development Department who coordinated the preparation of the documents and organized this seminar, in particular the leader Daniel Titelman and his team composed of Noel Pérez Benítez, Michael Hanni, Ivonne González and Sandra Galaz , Sol Etcheberry , Mariana Gonzalez, Tania Ulloa and Patricia Weng.
Thanks to you all.
We look forward to seeing you again next year at the next seminar.
And we wish all travelers a safe return home.