Latin America’s Renewed Fiscal Challenges
Many countries are running excessive budget deficits amid slow revenue growth and higher borrowing costs.
Even before the COVID-19 pandemic hit, economists at the World Bank, the IMF, and credit rating companies warned that many Latin American countries were facing daunting fiscal challenges. The alert followed a considerable surge in borrowing and debt-to-GDP ratios after unusually slow economic growth during 2012-19. Worsening debt and interest burdens, it was cautioned, would limit governments’ ability to respond to potential new shocks. Unless economic growth accelerated markedly, fiscal restraint was warranted in nearly all countries. To make a meaningful and lasting difference,...
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