Latin America, Caribbean countries need urgent fiscal reform after pandemic, IDB says

Le Nelson Bocanegra

BOGOTA, March 20 (Reuters) – Economies in Latin America and the Caribbean remain weak in the years following the pandemic of coronavirus and must implement urgent fiscal reforms to address challenges social, the Development Bank of America (IDB) said Saturday.

The group expects the region to see an average economic expansion of 4.1% this year, after a 7.4% decline in 2020, representing the worst recorded economic crash since 1821.

However, economic growth could slow to 2.5% in 2022 and 2023, the IDB said in a statement during its annual assembly, held in Colombian city of Barranquilla.

Worse still, the region is in danger of seeing timid growth of 0.8% this year, before contracting 1.1% in 2022 and 1.8% growth in 2023, the IDB added, urging countries lay the foundations for a harder recovery.

If the region is to achieve stronger growth rates, it needs to implement reforms to improve productivity, help connect companies to a global value chain and stimulate digital economies and job creation in a new fashion. -incoverable, stable, the IDB said.

“Given the fiscal challenges and high levels of debt, the development of fiscal bases should be a high priority issue,” said Andrew Powell, senior adviser to the IDB and one of the report’s co-ordinators.

Countries with low tax incomes should try to increase their incomes without sacrificing economic growth, the bank said. More employment should be allocated to projects that deliver strong social impact, such as infrastructure work needed to build a digital economy and generate employment.

Although a few countries implemented large fiscal packages during the pandemic, more than two-thirds of the region’s governments provided less support of about 3% of gross domestic product or less, the IDB said.

(Reporting by Nelson Bocanegra Written by Oliver Griffin; Editing by Cynthia Osterman)