Responsible Fiscal Policy and Economic Development: A Challenge for Latin America After COVID-19

The COVID-19 pandemic has made it evident that the deep global economic-financial crisis of 2007–2009 has not been overcome. Instability and uncertainty have reached extreme levels in all public and private spheres, demanding to revolutionize the economic structure, promote innovation in methods to manage production, generate originality in the social and institutional organization of the State and to accelerate the advent of new energy sources to promote in unprecedented ways the relationship between human beings and nature. In recent years and during the pandemic, in Latin American economies, unemployment, underemployment and informal employment, public debt, and inflation rates have increased, while the real income of governments fell. This situation is accompanied by persistent operating account deficits, public and private debt negotiations, high interest rates, periods of stability or appreciation in the exchange rate, volatility of foreign capital flows and flight of national capital; all being favorable elements for the mainstream policy based on fiscal discipline. In a post-pandemic stage, during which income concentration accelerates and the prices of basic necessities such as food and medicines increase, the planned government deficit, taking into account the heterogeneity among countries in the region, could avoid another lost decade with a multiplier effect on socio-economic development.