1. Fiscal Indicators in Latin America and the Caribbean
Meeting of the Public Policy Management and Transparency Network:
IDB, Washington, may 2005
Fiscal Indicators in Latin America and the Caribbean
Ricardo Martner
Area of Budgeting and Public Management,
ILPES, CEPAL, United Nations

2. PUBLIC POLICY OVERVIEW
Part A: PUBLIC FINANCES
group vision
public income
public spending
fiscal decentralization
public debt
public balance and macroeconomic cycle
Part B: BUDGETARY INNOVATIONS
macro-fiscal rules
counter-cyclic policies
transparency, systems and contingent liabilities
civic participation and budget
result-based public policy

3. Fiscal operations coverage: a recurrent debate
Index
Fiscal operations coverage: a recurrent debate
“Examples of creative indicators”
Chile: structural balance and new accounting framework
México: traditional balance and public private partnerships
Public debt in Brazil
Indicators of “quality” of public spending
The functional classification
Social Spending in Colombia
A “quality” synthetic indicator
Conclusions and Recommendations

4. International Comparisons of public spending, 1970-2005,
Fuente: OCDE, Economic Outlook N. 75 para países de la OCDE; FMI y CEPAL para América Latina..
1/ For Latin american countries coverage is central government

5. Latin America : Central Government
When the base year is 1990:
There is a generalized increase;
More intense when the starting point is low.

6. Latin America : Central Government
When base year is 1980:
The rise only concerns countries with low starting point levels;
For the others, the nineties increase is just recovery

7. Latin American Countries: spendings and incomes for central government
Fuente: OXLAD para serie , CEPAL para serie

8. Public debt according to coverage
Source: ILPES-CEPAL. Simple average, without considering Nicaragua.

9. The evolution of public expenditure, 1990-2003

10. I. La cobertura de las operaciones fiscales
FISCAL STATISTICS INSTITUTIONAL COVERAGE IN IMF STAFF REPORTS
(as % in each group of countries)
There is a bias towards NFPS in Latin American countries
IMF proposal to exclude “commercially run enterprises”
Fiscal targets cover the General government in the EU, Chile and other countries. So does the IMF Manual 2001.

11. II. Examples of “creative indicators”
As opposed to creative accounting, these indicator of “good practices” aim at conducting fiscal policy.
Chile: structural balance and new accounting framework
México: traditional balance and public private partnerships
Public debt in Brazil

12. II.Cyclical component of Budget in Chile

13. Public debt in Brazil
There is a difference of 37 point of GDP between gross debt and the “fiscal net debt”. Which is the good number?

14. Financial requirements in México
There is a difference of 37 point of GDP between gross debt and the “fiscal net debt”. Which is the good number?

15. II.México: public-private partnerships
PUBLIC INVESTMENT IN MEXICO
Pidiregas for PEMEX and CGE
More ample definition: hospitals, schools, roads.
There are future transfers (maintenance and amortization of investment). Examples: PFI in UK, PPS in México.
Big potential to reduce investment bias, but still do not represent more than 15% of total investment. (UK)

16. III. Towards a better quality in public spending
Functional Classification of Public expenditures (COFOG)
The aim is rather to avoid pro-cyclical public spending…

17. Social spending in Latin American Countries
Source: Cepal, Social Development Division.
a/ simple average for 16 countries (excluding Bolivia and El Salvador).

18. III.Priority to social spending?
Colombia: “social public spending will have priority over any other allocation” (artículo 350 de la Constitución)
The law of 1994 stresses that social spending are those that “increase general welfare and improve the quality of life of citizens”
The new budget law consider public spending the allocations that adress unsatisfied basic needs in health, education, sports, envirnmental protection, water and subsidies associated to the last two items.

19. III.Pro-poor budgeting?
1: public debt interest payments
2:collective consumption, wages, pensions
3: housing, social exclusion, family and children, unemployment
4: education, active policies of employment, health, R&D, infrastructure

20. Conclusions and recommendations
Make progress in the General Government coverage, both in accounting and targeting.
Apply GFSM 2001
Include officially measures of cyclically adjusted balances, to reflect the effects of macroeconomic environment in public finance.
Report the magnitudes and types of PPPs.
Improve information and budget projections concerning functional classification.
The network could trigger these changes....

21. Reunión de la Red de Gestión y Transparencia de la Política Pública
BID, Washington, 23 y 24 de mayo de 2005
Thank you...