Public finances

The public finances of most of the countries of Latin America remained relatively under control in 1993, a situation suggesting that the fiscal adjustment programmes begun in the final years of the 1980s seem to be taking hold. The severe fiscal crisis that plagued most countries in the region throughout the 1980s obliged their Governments to adopt drastic fiscal adjustment programmes; these initiatives were closely associated with the countries’ efforts to adjust their external accounts, particularly in relation to the debt problem, and their stabilization programmes. Many of these programmes achieved no more than fleeting results, and as a result public-sector financial difficulties became a recurrent problem. Successes were few and far between in the early 1980s, and even those few countries that had managed to make progress in terms of their fiscal adjustment efforts ran up against formidable obstacles when the debt crisis supervened. In the course of that decade, promising signs began to be seen in some countries’ fiscal accounts, although the improvements were chiefly based on deep spending cuts -particularly in wages, investment and budgetary items earmarked for social programmes- which had an extremely adverse effect on public services. Other economies continued to have severe problems with their fiscal accounts, however, and this undoubtedly contributed in many cases to the acceleration of inflation seen during that period -in some countries resulting in bouts of hyperinflation-as well as, in turn, being fueled by it. The size of these deficits, which in some cases were clear symptoms of a lack of fiscal control, made it necessary to apply drastic fiscal adjustment programmes in order to put public-sector finances back on a sound footing and to regain the confidence of economic agents in the future of the authorities’ economic policy.

Sustainable Development Goals:

Decent Work and Economic Growth

Industry, Innovation and Infrastructure

Peace, Justice and Strong Institutions