Public expenditure in Latin America: trends and key policy issues

This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.This paper examines trends in government spending in Latin America from the mid-1990s to 2006.It also examines key policy issues, including the cyclicality of spending, public investment, public employment, and social expenditures.It finds that primary expenditures have trended upward for the past ten years as a share of GDP, driven by increases in current spending, in particular for social expenditures.Fluctuations in real spending have continued to follow a procyclical pattern.The paper finds that there is substantial scope to improve the efficiency of public investment, public employment, and social spending.