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Marta Ruiz-Arranz - Oscar Valencia - David Herrera - Carolina Ulloa Suárez Leave a Comment There is a widespread belief that fiscal rules hinder public investment. The reasoning is straightforward: to adhere to these rules, governments often must reduce spending, particularly on infrastructure projects, which are not deemed essential in the short term. But is that really the case? New evidence from Europe, emerging markets and Latin America shows otherwise. Governments that comply with fiscal rules end up enabling more investment. This discovery holds significant implications for Latin America and the Caribbean (LAC), where many countries often disregard fiscal rules during economic downturns or stress. https://blogs.iadb.org/gestion-fiscal/en/sticking-to-fiscal-rules-boosts-investment-latin-america/

January 21, 2025   By Oscar Valencia, Jose E. Gomez-Gonzalez and Jorge M. Uribe.  Imagine living in a country where storms, floods, or droughts can cause catastrophic damage to the livelihoods of thousands or even millions of people, undermining a country’s ability to grow and maintain its macroeconomic stability. This is the challenge facing several developing countries all over the world, especially in Latin America and the Caribbean (LAC). The connection between climate risks and a country’s fiscal situation might not seem obvious, but it is consequential. When investors perceive a country as vulnerable to climate change, borrowing costs for that country goes up—sometimes significantly.   https://blogs.iadb.org/gestion-fiscal/en/climate-vulnerability-sovereign-risk/