THE AMERICAS

percentage points from the previous year), which benefited from a recovery in tourism-related revenue. Strong revenue growth in Chile (2.8 percentage points), Peru (2.7 percentage points) and Brazil (2.4 percentage points) was supported by higher commodity prices and increased revenues from taxes on goods and services, driven by the economic recovery.

The largest decline was observed in Guyana, where nominal GDP rose by 47% in 2021 amid a sharp increase in natural resource production, while tax revenues rose by 16%, resulting in a 4.5 percentage points decline in the tax-to-GDP ratio.

After falling by 0.7 percentage points in 2020 at the height of the pandemic, revenues from taxes on goods and services bounced back across the LAC region in 2021, rising by 0.8% of GDP on average.

Taxes on goods and services remained the main source of tax revenues in the LAC region in 2021, accounting for 50% of total tax revenues on average, with value-added tax accounting for 29.9% of the total. Income taxes generated 26.7% of total tax revenues, with revenues from corporate income tax accounting for 15.4% of total tax revenues.

According to the report, the hydrocarbon and mining sectors have given a major boost to public revenues in the LAC region. Hydrocarbon-related revenues in the major oil producers rose from 2.1% of GDP on average in 2020 to 2.6% of GDP in 2021 and an estimated 4.2% of GDP in 2022. Mining revenues in major mineral producers rose to 0.68% of GDP in 2021 (their highest level since 2011) and an estimated 0.70% of GDP in 2022.

Latin America and the Caribbean Needs a Reactivation with Transformation to Move Towards a More Productive, Inclusive and Sustainable Future

Latin America and the Caribbean needs to pivot in the transformation of its development model in order to move towards a more productive, inclusive and sustainable future, José Manuel Salazar-Xirinachs, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), affirmed at the inauguration of the seminar, “Financing for the Big Push for Sustainability”, which took place at the headquarters of the Brazilian Development Bank (BNDES) in Rio de Janeiro, Brazil.

“We need a reactivation with transformation,” ECLAC’s highest authority emphasised at the start of the official visit in June. “It is necessary to act with a sense of urgency and raise the ambition level of policy efforts. This is not a time for gradual and timid changes, but instead for transformative and bold policies that would really make a difference on development,” he noted during his presentation at the seminar co-organised by ECLAC, BNDES and the Friedrich Ebert Stiftung foundation (FES).

Joining José Manuel SalazarXirinachs at the event were Aloizio Mercadante, President of BNDES, and Christoph Heuser, Representative of FES in Brazil.

In his remarks, the President of BNDES pointed to the long history of cooperation between Brazil’s development bank and ECLAC, along with the challenges for collaboration in the current context of a new transformative, digital and sustainable industrialisation.

Christoph Heuser, meanwhile, stressed that the partnership between ECLAC and FES has always been virtuous and incorporates matters of shared interest, such as the progress towards fulfilment of the Sustainable Development Goals (SDGs), employment and gender equality, not just conceptually but in the distinct areas that can include a just transformation.

In his presentation, ECLAC’s Executive Secretary recalled that the region is at a turning point vis-à-vis the cascading crises that are exacerbating historical gaps. He added that globalisation is no longer what it was over the last 30 years: it has shifted to a regionalism marked by protectionist tendencies, the reconfiguration of global value chains fuelled by geopolitical motives, and a rivalry over technological supremacy.

In the social realm, meanwhile, ECLAC’s highest authority specified that extreme poverty and poverty are still above pre-pandemic levels: in late 2022, poverty affected 201 million people (32.1% of the total population), and the number of people living in extreme poverty was 82 million (13.1%), due to the combined effects of low growth, the labour market and inflation.

He warned that in Latin America and the Caribbean, only 25% of the Sustainable Development Goal targets exhibit behaviour that enables forecasting their fulfilment by 2030; 48% shows a correct, but insufficient, trend; and the remaining 27% exhibits a backsliding trend. Therefore, “75% of the targets are at risk of not being fulfilled, unless decisive action is taken to resume the correct path,” he warned.

In order to move towards a reactivation with transformation, ECLAC proposes ten priority areas, the senior United Nations official stated. These areas are: promotion of productivity, productive development, employment and inclusive growth; reduction of inequality; strengthening of social policies and social protection; education and vocational training; gender equality and the care economy; sustainability and climate change; digital transformation; proper management of migration flows; regional economic integration; as well as macroeconomics for development.

The World Bank to Support Inclusive and Sustainable Economic Recovery in Costa Rica

The World Bank Board of Executive Directors has approved a US$500 million loan to support Costa Rica’s post-pandemic recovery programme, with special emphasis on protecting family incomes, strengthening small and medium-sized enterprises (SMEs) as well as boosting fiscal sustainability based on green and low-carbon growth.

Nogui Acosta Jaén, Minister of Finance, noted: “This new budget support loan demonstrates the World Bank’s confidence in the government’s commitment to inclusive and sustainable economic growth. The Costa Rican economy is emerging from the severe impact of the pandemic, but adverse external conditions have presented us with new challenges that we must address in terms of economic reactivation and fiscal consolidation.”

The series of credits supports three mutually reinforcing prodevelopment pillars:

● Protect people’s jobs and incomes from the impact of COVID-19 and foster the recovery of small and medium-sized businesses. This will contribute to achieving a combination of international shock response measures and reforms leading towards more efficient and resilient social protection

● Reinforce the sustainability of public finances through improved tax collection, more efficient spending and better management of public debt

● Promote green growth and low-carbon development that is resilient, equitable, climate-smart and sustainable, and that makes greater use of clean technologies

“While Costa Rica has made much progress in the environmental, economic and social spheres, the reduction of poverty and inequality remains an ongoing challenge,” said Carine Clert, World Bank Country Manager for El Salvador and Costa Rica. “With this operation, we seek to underpin the Government of Costa Rica’s efforts to progress towards fiscal consolidation and investment in more ecological production systems – as well as helping to strengthen basic protective measures for the most vulnerable members of the population, especially women.”