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Source: IDB
Public spending in Latin America and the Caribbean has increased by an average of 7 percentage points over the past 20 years.
This increase is not reflected in quality physical and human capital or in lasting social benefits.
Reality faces the problem of fiscal sustainability and slow growth.
With public budgets in all Latin American and Caribbean countries likely to remain tight for some time to come, and with citizens' concerns about tax burdens growing, coupled with international economic volatility, governments have been under pressure to improve the value for money of public services.
How to meet this challenge?
There are two alternatives:
1. Raise taxes or cut spending.
2. Spend better by shifting from inefficient spending to efficient spending that contributes to growth without exacerbating inequality.
Adjusting government spending can be a painful process, but identifying efficiencies in public spending can help reduce the burden.
This process is known as “smart” spending.
Date
Although in 2016 the amount of goods and services produced annually in the 26 countries of the region exceeded US$5,3 trillion, public spending exceeded US$1,9 trillion (a figure close to Brazil's GDP).
Source: Spending for Better Lives. Alejandro Izquierdo and Carola Pessino
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