"Nothing is absolute. Everything changes, everything moves, everything revolves, everything flies and goes away." - Frida Kahlo

MARKETS

May 29, End Of Day

• Argentina
  • S&P MERVAL Index = 2,308,055.76 (YTD = -8.90%)
• Brazil
  • BOVESPA Index = 138,533.70 (YTD = 15.17%)
• Chile
  • S&P IPSA Chile = 4,266.53 (YTD = 18.03%)
• Colombia
  • MSCI COLCAP = 1,636.59 (YTD = 18.63%)
• Mexico
  • IPC Mexico BMV = 58,614.41 (YTD = 18.83%)
• Peru
  • S&P/BVL Peru = 31,304.05 (YTD = 8.09%)

BUSINESS

Latin America’s Fiscal Frontier

The 2025 edition of Revenue Statistics in Latin America and the Caribbean reveals a continued rebound in public revenues across the region following the COVID-19 shock. However, despite broad improvements, the region’s tax-to-GDP ratios remain far below OECD levels, and wide disparities between countries point to persistent structural weaknesses.

Key  Figures

• The unweighted average tax-to-GDP ratio in Latin America was 21.5% in 2022, up slightly from 21.0% in 2021 .
• This remains well below the OECD average of 34.0% in 2022, which was unchanged from the previous year.

Trends and Composition

• Value-added tax remains the dominant source of revenue, accounting for an average of 28.7% of total tax revenues in 2022, though slightly down from 29.7% in 2021.
• Corporate income taxes saw a broad recovery: 20 of 26 countries increased their CIT revenues in 2022 due to post-pandemic economic rebounds and commodity price effects.
• Personal income tax continues to play a minor role, making up only 9.6% of total revenues on average in the region, far below the 24.1% OECD average.
• Social security contributions comprised 16.7% of revenues, similar to 2021, but still below the OECD’s 25.4% share.

Structural Challenges

Persistent systemic constraints include:

• High levels of informality, limiting the tax base.
• Low effectiveness in collecting personal and property taxes.
• Tax expenditures and exemptions that erode revenue potential.
• Dependence on indirect taxes, which can be regressive.

Latin America is showing measured progress in fiscal recovery, but remains structurally constrained in its ability to mobilize domestic resources. The long-term challenge is not only to increase revenues but to do so more equitably and efficiently, while building public confidence in the fiscal contract.

CURRENT AFFAIRS

El Salvador: The IMF has reached a staff-level agreement to release $120 million under its $1.4 billion loan program, pending board approval. The Fund praised El Salvador’s progress, noting most targets were comfortably met. In parallel, the country secured a separate $500 million loan from the IDB in March to support its budget.

Argentina: The government is easing foreign currency reporting rules to unlock an estimated $271 billion in undeclared U.S. dollars held in cash and offshore accounts. The move, part of a wider amnesty scheme, allows residents to use dollars without declaring their origin, aiming to strengthen the peso and boost liquidity. The IMF warned the plan must comply with anti-money laundering standards.

Brazil: European Council President Antonio Costa will visit Brazil from May 27–29 to deepen EU-Brazil investment ties. He will meet President Lula and speak at an EU-Brazil investment forum, with the EU already Brazil’s top foreign investor. The visit also aims to support progress on the pending EU-Mercosur trade deal.

FURTHER READING

Check our recently published insights here.

💡 Social Innovation in Latin America: Tackling Climate and Health Crises

• Food Security Solutions – Initiatives like Nilus and CREN redistribute food and empower communities through nutrition and job training.
• Health Access for All – Social enterprises like Umana and telemedicine services expand preventive care to remote, climate-affected regions.
• Resilient Agriculture – Programs like Ecosistema Jaguar promote regenerative farming and sustainable water use to boost food security.
• Finance Meets Impact – Networks like Latimpacto bridge funding gaps by linking investors to high-impact, climate-focused projects.

📖 Read more here.