Stability and Transfer Dependence Shape Regional Public Finances in Latin America and the Caribbean

Public revenue streams across Latin America and the Caribbean have remained relatively stable, but the region shows marked heterogeneity and difficulty in raising tax collections. Sub‑national governments have largely balanced their accounts, yet they continue to rely heavily on transfers from central authorities.

In Mexico, the federal government distributes most fiscal resources to states through participations, a system that has been reformed to reduce favoritism. Similar dynamics are observed in Caribbean nations, where post‑disaster reconstruction has driven capital spending. Many countries have implemented fiscal tightening measures such as salary cuts for public employees and tighter debt‑service management, keeping state debt levels below pre‑pandemic peaks. Ongoing coordination efforts by bodies like the CEPPAL, the National Fiscal Coordination System, and the OLACEFS aim to strengthen revenue collection and improve fiscal governance across the region.