Ministers of Finance of the Community of Latin American and Caribbean States (CELAC), agreed today to advance in the design of a common regional agenda in response to the global economic crisis, during a high-level face-to-face meeting held at the headquarters of the Commission Economic Center for Latin America and the Caribbean (CEPAL) in Santiago, Chile.
The meeting was organized by Saint Vincent and the Grenadines, in its capacity as President Pro Tempore of CELAC, with the support of ECLAC, in compliance with the mandate derived from the Buenos Aires Declarationissued by the 7th Summit of Heads of State and Government of the regional bloc, held in January 2023 in Argentina.
The meeting, in which authorities from 18 Latin American and Caribbean countries participated, was inaugurated by José Manuel Salazar-Xirinachs, Executive Secretary of ECLAC, and Camillo Gonsalves, Minister of Finance of Saint Vincent and the Grenadines.
During the meeting, the authorities analyzed the current global and regional macroeconomic context, the regional fiscal situation, the fiscal implications of meeting investment needs for climate change adaptation and mitigation, and strengthening progress in meeting the Development Goals. Sustainable (SDG).
In his inaugural speech, José Manuel Salazar-Xirinachs highlighted the importance of generating regional meetings of finance authorities with the support of ECLAC and the United Nations, to provide spaces for dialogue that contribute to the construction of common agendas to face the ups and downs of the global economy.
He added that the region faces global macroeconomic conditions that make it very difficult to conduct macroeconomic policy. The conflict between the Russian Federation and Ukraine contributed to weakening the pace of global growth, generated greater volatility in international financial and commodity markets, reinforcing global inflationary pressures and prompting central banks in advanced economies to accelerate and synchronized tightening of monetary policy in 2022 to anchor inflation expectations, sharply reducing capital flows to emerging markets, he explained.
“This is the situation we are facing, exacerbated by external shocks and the aftermath of the pandemic. In this context, macroeconomic policy has to deal with a slowdown in economic growth and rising inflation, which coexist with the urgent need to reactivate economies, create quality jobs and strengthen social policies”, he explained.
The Executive Secretary of ECLAC added that the average economic growth of the region in the decade 2014-2023 will be 0.8%, which is less than half the average growth of the famous “lost decade” of the years eighty (2.0%).
He stressed that the current circumstances, characterized by great needs and strong restrictions, suggest the need to, on the one hand, review the fiscal pacts on the basis of a framework of sustainability of public finances that emphasizes and combines the increase in revenues with a better use of resources on the spending side; and on the other, reforms in the international financial system to facilitate the restructuring of the external debt.
“We cannot forget that the political viability of proposals to increase income depends on greater quality, equity and access to public services,” he stressed.
Finally, the highest representative of the regional Commission urged the implementation of measures at the international level to move towards a reduction of the restrictions on growth and development that impact most of the countries of Latin America and the Caribbean due to the high debt service and its implications for fiscal space, an issue promoted by the Secretary General of the United Nations, António Guterres, through a series of initiatives in which ECLAC participates.
For his part, the Minister of Finance of Saint Vincent and the Grenadines, Camillo Gonsalves, called for repositioning CELAC as an active body that addresses the challenges faced by the countries of Latin America and the Caribbean, and stressed the importance of creating a fiscal space for development in response to disasters, which allows accelerating the achievement of the objectives to achieve transformative development.
The Minister specified that the majority of the Caribbean countries have not yet recovered the production levels prior to the pandemic and emphasized that saying that this decade is more lost than the previous one is especially true for the Caribbean States dependent on tourism, whose levels of production still do not reach those registered in 2019.
Likewise, Camillo Gonsalves stressed that the regional debt problems originate from external shocks rather than from the macroeconomic mismanagement of the countries of the region.
After the inauguration, the Executive Secretary of ECLAC, José Manuel Salazar-Xirinachs, presented to the CELAC Finance authorities the main findings of two ECLAC reports that analyze the restrictions to growth and development that are originate from public debt and its implications for fiscal space in the countries of the region, as well as options to promote a fiscal policy for growth, redistribution and productive transformation.
