Brazil & Southern Cone - October 2018

Inefficient spending: On 24 September the Inter-American Development Bank (IDB) released a new report on government spending, which found that Argentina has the highest level of inefficient government spending in Latin America. According to the ‘Better Spending for Better Lives: How Latin America and the Caribbean Can do More with Less’ report, the level of inefficient government spending (identified as spending on officials’ salaries and on inefficient state subsidies) in Argentina is equivalent to 7.2% of its GDP, well above the regional average of 4.4% of GDP. In particular the report noted that Argentina has the third-largest proportion of government employees in the region behind Barbados and Trinidad & Tobago, which accounts for 30% of total government spending, equivalent to 12% of its GDP. The release of the report comes as the Argentine government led by President Mauricio Macri is trying to secure approval for an austere 2019 national budget in which it plans to significantly reduce government spending to eliminate the fiscal deficit and restore market confidence in the Argentine economy. 

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