Latin American Governments Face Growing Fiscal Pressures Amid Rising Debt

Chile’s public finances are under strain as the latest public finance report warns that the fiscal deficit could exceed official estimates and public debt may surpass the 45% of GDP threshold by 2028. The cost of free higher‑education tuition, estimated at US$2.7 billion this year, is cited as a major driver of the deficit, prompting calls for a co‑responsibility model where graduates repay a portion of their education costs.

In the Dominican Republic, the Central Bank’s debt has surged to over one trillion pesos, representing roughly 12% of GDP. The rise reflects ongoing quasi‑fiscal deficits and insufficient government transfers to offset operating losses. Analysts argue that without a comprehensive fiscal reform, the debt trajectory could become a “time bomb,” limiting monetary policy effectiveness and increasing vulnerability to inflationary shocks.