Advanced Search

Covid and after: the battle for fiscal space in LAC

The wild card: Politics

So far, the discussion has made little mention of politics, a critical omission. In a hypothetically politics-free society losing and regaining fiscal space would be a largely technical matter, with the population passively accepting the necessary changes in taxation levels, standards of living, and public services needed to edge the fiscal cycle onto a more sustainable path. The reality of course is that there is no such thing as a politics-free society and political considerations in the LAC region have had, and will continue to have, a vast impact on fiscal management. For a start, there is the question of timing. Latin American governments are usually elected for terms of between four and six years. Among those with four-year presidents are Argentina, Chile, Colombia, and Brazil, while the five-year group includes Peru and Panama. At the other end of the spectrum lies Mexico, whose president serves a six-year term. Those periods in power are also sub-divided by various types of mid-term congressional, municipal, and regional elections, during which the balance of power and political complexion of the government may change. Presidents usually try to engineer an economic feel-good factor and avoid any form of austerity or belt tightening for at least a year ahead of elections, which immediately restricts the nature of the reforms that can be considered.

End of preview - This article contains approximately 538 words.

Subscribers: Log in now to read the full article

Not a Subscriber?

Choose from one of the following options