The IMF calls for higher revenues and more fiscal space
The recovery of the economy and the consequent improvement in treasury revenues, together with the proposed reforms to improve public spending in Paraguay, may be insufficient to counteract future shocks, for which it is advisable to analyze and implement policies aimed at realizing them. in to increase tax revenue.
This was indicated by Mauricio Villafuerte, the head of the IMF mission in Paraguay, in the framework of the event, which was called Global prospects and implications for Paraguay, which was held yesterday at the Central Bank Institute of Paraguay (BCP). This afternoon, a press conference was held on the occasion of the conclusion of the technical mission of the monetary authority.
Villafuerte detailed the latest forecasts made by the International Monetary Fund on both the global and regional economies, highlighting, among other aspects, the fact that Paraguay is better positioned in the process of recovery within the region, given the low decline in GDP in 2020 compared to other countries.
Greater economic dynamics lead to a recovery in Treasury groups. However, he indicated that new shocks are expected in the coming years, which is why it is necessary to increase treasury revenues and generate more reserves to meet the large expenditures.
“In an ideal world, one would think that as growth recovers, tax revenue should be increased and with structural reforms, given the specific case of Paraguay, to increase spending efficiency, it would not be necessary to raise taxes, but the reality is that there is a recurrence of shocks which makes it necessary Increasing the space for fiscal policy.
“It is necessary to conserve space in the future and there are shocks that generate pressures on spending, and social needs are also increasing. You have to think that the world is not perfect, it is necessary to increase fiscal space and, in this context, tax policies that tend to increase government income.”
In addition, Mauricio Villafuerte positively assessed the process of normalizing the reference rate of monetary policy that the Chinese Central Bank is facing, but stressed that this must be accompanied by an adjustment of fiscal policy, in order to further control inflation and that expectations for this indicator remain. well established in the medium and long term.
4,5% It is the projection of the rise in domestic gross domestic product achieved by the International Monetary Fund by the end of 2021, through its latest World Economic Outlook.
3.8% This is the current estimate for 2022, always according to the International Monetary Fund. This account was downgraded in the last update.
5,9% Global GDP growth will be at the end of this year, while next year it will expand by 4.9%.