Fiscal risks analysis, ALC monitoring and policy options with inclusive growth

implementation

This Technical Cooperation (TC) project aims to evaluate and improve existing tools for macro-fiscal risk analysis in Latin American and Caribbean countries. Additionally, to integrate these tools with fiscal discipline frameworks, such as fiscal rules and councils, and with energy transition strategies to strengthen institutions to contribute to mitigating existing macroeconomic risks and promoting fiscal sustainability. In the aftermath of the COVID-19 crisis, the region's fiscal position deteriorated significantly, four countries defaulted, and most had to abandon the fiscal sustainability paths they were on before the pandemic. In this context, the TC proposes to improve early warning tools so that governments can promptly mitigate the different sources of risk and respond with appropriate policies that will allow them to return to their fiscal consolidation processes. The specific objectives of the TC are: (i) to develop analytical tools for identifying the main macro-fiscal variables that may affect the fiscal sustainability of countries. (ii) To improve the early warning model with accurate information and integrate institutional and climate change indicators that will allow countries to assess current macro-fiscal risks thoroughly. (iii) To promote regional dialogue among countries to share lessons learned and promote best practices in identifying and mitigating risks to fiscal sustainability.