"Time is an illusion that only exists when you don't think about it." - Carlos Fuentes
March 20, End Of Day
Governments across Latin America have built extensive digital infrastructure but are failing to fully leverage their data for decision-making. While 100% of surveyed countries have public financial management (PFMIS) and tax systems (TaxMIS), their use of advanced analytics remains limited.
The Digital Divide in Government Analytics
Governments rely heavily on descriptive analytics (96%), but only 55% use diagnostic analytics and 50% employ predictive analytics. The imbalance is clear: tax collection benefits from data, but public spending remains inefficient.
Fiscal Impact: Untapped Savings
Government spending continues to outpace revenue growth, as seen in the increasing expenditure-to-GDP ratio (27% in 2021–2022, up from 23.8% in 2010–2015). Meanwhile, revenue has grown at a slower pace, highlighting inefficiencies in tax collection and public spending (see graph). In Brazil, three wage bill policy scenarios showed potential fiscal savings between $12.5B and $34.7B by 2030. Governments are sitting on a goldmine of data, yet bureaucratic inefficiencies and poor data governance hinder progress.
LAC governments must go beyond data collection—they need data-driven action. By integrating diagnostic and predictive analytics, strengthening data-sharing frameworks, and investing in skilled analysts, they could unlock savings while improving public services and trust.
Brazil: The Kawa fund aims to raise $176 million by 2030 to support small cocoa producers in Bahia and Pará. Launched by Arapyau Institute, Violet, Taboa, and MOV Investments, it will initially lend $5.3 million to 1,200 farmers. With cocoa prices rising due to global supply issues, the fund seeks to improve productivity through loans for fertilizer, irrigation, and equipment. Farmers will have three years to repay with a six-month grace period, at a 12% annual interest rate. Loans are restricted to agroforestry producers to promote forest conservation.
Argentina: Congress approved President Javier Milei’s decree to begin negotiations for a new IMF loan program, a crucial step for stabilizing the country’s finances. Argentina, the IMF’s largest borrower, is still repaying a $44 billion loan from 2022. The government aims to strengthen central bank reserves and lift capital controls in place since 2019. The vote passed with 129 in favor, 108 against, and six abstentions. Markets reacted positively, with the Merval index rising 4.5% and bonds climbing.
Venezuela: President Donald Trump is considering extending Chevron’s license to produce oil in Venezuela, despite earlier plans to reverse a Biden-era decision allowing the company to operate there. Chevron, which has stakes in multiple Venezuelan oil projects, was given until April 3 to wind down operations but may receive an extension following a White House meeting with industry executives. The Trump administration is also weighing financial penalties on countries doing business with Venezuela.
🌟 Episode 2 of ‘Paraguay: The Hidden Gem of Latin America’ is out now.
Titled ‘Turning Challenges into Opportunities’, this episode dives into the key drivers of Paraguay’s growth, from its young and dynamic workforce to its business-friendly policies. We explore how sustainable energy, tech adoption, and entrepreneurial innovation in financial services are fueling the country’s transformation. 🌍💡📈
