The institutional development of ministries of finance determines their capacities to achieve fiscal policy objectives (sustainability) and contribute to economic policy objectives. This study analyses the institutional transformation of ministries of finance in Latin America. Methodologically, it examines the functions assigned by law (legal-regulatory frameworks). Analytically, it proposes two categories of functional models (traditional models focused on spending control and modern ones focused on strategic spending management). Successful institutional strengthening processes have at least four dimensions: development of regulations, processes, and methodologies; recruiting and training of human talent; the development and implementation of digital government tools; and the financial resources to develop these dimensions.
The COVID-19 pandemic has exposed the weaknesses suffered by institutions in their capacities to meet economic and social challenges. This study highlights the need to close gaps in the institutional development of ministries of finance and move away from a traditional functional model towards a more modern one, in order to tackle challenges of macroeconomic and fiscal policy and quality and inclusion in public services.