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Experts Stress the Need to Create a New Financing Model, at the Conclusion of the Thirty-Third Regional Seminar on Fiscal Policy

23 April 2021|News

The event came to an end this Friday, April 23, with three webinars on financing for development, tax evasion and illicit flows, and climate finance.

The XXXIII Regional Seminar on Fiscal Policy, one of the main forums of reference for discussing issues related to the public finances of Latin American and Caribbean countries, concluded this Friday, April 23, with three webinars featuring prominent specialists who debated matters of financing for development, tax evasion and illicit flows, as well as climate finance.

The final day of the seminar – which has served for 33 years as a high-level, multilateral regional space for exchanging opinions about the region’s macroeconomic and fiscal policies and challenges – began with a webinar entitled “Financing challenges for sustaining an expansive fiscal policy and expanding fiscal space for a transformative recovery in middle-income countries,” in which the speakers included Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC); Stephany Griffith-Jones, of Columbia University (United States); Mark Plant, Co-Director of Development Finance at the Center for Global Development; and Ottón Solís, Representative Director for Costa Rica before the Central American Bank for Economic Integration.

In her remarks, Alicia Bárcena spoke about the challenges for sustaining expansionary fiscal policy and expanding fiscal space for the emergency as well as for achieving a transformative recovery. She indicated that the COVID-19 crisis has considerably widened Latin America and the Caribbean’s financing gap, adding that the region allocates more than half of its revenue from exports of goods and services (59%) to debt service payments.

On this occasion, she called for international financial institutions to increase the liquidity that the region’s countries need to meet their financing requirements. “We urgently need a public and multilateral credit rating agency. Middle-income countries should no longer be classified based on their GDP per capita. If they are not helped, there will be a very serious systemic crisis,” she emphasized.

“We have talked about a new development model, but we also need a new international financing model. The instruments available should be placed under the umbrella of a new international architecture. Initiatives to close the financing gap in Latin America and the Caribbean should form part of a broader reform of the global financial architecture,” she stated.

She added that ECLAC has proposed five policy measures to address the region’s liquidity needs and debt problems and to create a suitable framework for building forward better: expanding and redistributing liquidity from developed countries to developing countries; strengthening regional cooperation by increasing the lending capacity and responsiveness of regional, subregional and national financial institutions; carrying out an institutional reform of the multilateral debt architecture; expanding the set of innovative instruments aimed at increasing debt repayment capacity and averting excessive indebtedness; and integrating liquidity and debt reduction measures into a financing for development strategy geared towards building a better future.

After this initial event, a webinar entitled “Ending tax evasion and illicit financial flows: a priority challenge for the region and the world” was held, in which the participants were Alicia Bárcena; Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa (ECA); José Antonio Ocampo, Professor of Professional Practice in International and Public Affairs at Columbia University (United States); and Richard Kozul-Wright, Director of the Division of Globalization and Development Strategies at the United Nations Conference on Trade and Development (UNCTAD).

There, the experts analyzed the policy challenges related to ending tax evasion and illicit financial flows, along with the opportunities for redirecting those resources into sustainable development.

In a new presentation, Alicia Bárcena underscored that the problems of tax evasion and illicit flows are interconnected and solving them is a policy imperative for the countries of Latin America and the Caribbean. She also stressed that, given the persistence of the COVID-19 pandemic and the fragility of the economic recovery process, expansionary fiscal policy should be maintained in 2021.

“To improve revenue, it is indispensable that we eliminate evasion, establish multilateral agreements on corporate taxes, extend the scope of wealth and property taxes as well as taxes on the digital economy, those related to the environment and public health matters, and revise the royalties of extractive industries,” she declared.

She also warned that tax evasion represents a major challenge for successfully mobilizing domestic resources to finance the 2030 Agenda’s Sustainable Development Goals (SDGs). “We need collective action to stop illicit financial flows. We also need an international institution with accountable people of different nationalities, monitoring illicit transactions. We need global standards,” Bárcena specified.

Finally, at the conclusion of the Thirty-Third Regional Seminar on Fiscal Policy, a webinar entitled “Climate finance in Latin America and the Caribbean” took place, with remarks by Alicia Bárcena; Manuel Pulgar-Vidal, Global Leader of Climate and Energy at the World Wildlife Fund (WWF); Joseluis Samaniego, Director of ECLAC’s Sustainable Development and Human Settlements Division; Gustavo Máñez, Regional Climate Change Coordinator for Latin America and the Caribbean of the United Nations Environment Programme (UNEP); Huáscar Eguino, Lead Specialist in Fiscal and Municipal Management at the Inter-American Development Bank (IDB); and Kimberly Gruchenska Celis Calderón, Strategic Coordinator for the Financial and Monetary Sector at Ecuador’s Ministry of Economy and Finance.

The participants in this webinar addressed the options that exist for financing a recovery that would be truly transformative.

Alicia Bárcena indicated that the region of Latin America and the Caribbean faces a double asymmetry: while it emits just 8% of greenhouse gases globally, it is one of the regions that is most vulnerable to natural disasters and the effects stemming from climate change.

“At ECLAC we have proposed a ‘big push for sustainability,’ which seeks to close the gaps faced by the region and boost eight strategic sectors, namely the transition to renewable energy, the circular economy, sustainable mobility, the digital revolution, the health-care manufacturing industry, the care economy, the bioeconomy and sustainable tourism,” she stated.

The seminar concluded with the participation of the Ambassador of Spain in Chile, Enrique Ojeda Vila, on behalf of the Spanish Agency for International Development Cooperation (AECID), which sponsored the event. The diplomat indicated that as a result of the current crisis, we are facing a formidable challenge for fiscal policy, both in the countries of the European Union as well as Latin America and the Caribbean. “The expansionary stimulus must not stop until there is a full recovery,” he reaffirmed.