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Institutional transformation and strengthening of Latin America’s ministries of finance: From control to the strategic use of public resources for development

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  • Arenas de Mesa, Alberto
  • Mosqueira, Edgardo

Abstract

The institutional development of ministries of finance determines their capacities to achieve fiscal policy objectives (sustainability) and contribute to economic policy objectives. This study analyses the institutional transformation of ministries of finance in Latin America. Methodologically, it examines the functions assigned by law (legal-regulatory frameworks). Analytically, it proposes two categories of functional models (traditional models focused on spending control and modern ones focused on strategic spending management). Successful institutional strengthening processes have at least four dimensions: development of regulations, processes, and methodologies; recruiting and training of human talent; the development and implementation of digital government tools; and the financial resources to develop these dimensions. The COVID-19 pandemic has exposed the weaknesses suffered by institutions in their capacities to meet economic and social challenges. This study highlights the need to close gaps in the institutional development of ministries of finance and move away from a traditional functional model towards a more modern one, in order to tackle challenges of macroeconomic and fiscal policy and quality and inclusion in public services.

Suggested Citation

  • Arenas de Mesa, Alberto & Mosqueira, Edgardo, 2023. "Institutional transformation and strengthening of Latin America’s ministries of finance: From control to the strategic use of public resources for development," Documentos de Proyectos 48846, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    • Handle: RePEc:ecr:col022:48846
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    1. repec:idb:brikps:9152 is not listed on IDEAS
    2. Pessino, Carola & Izquierdo, Alejandro & Vuletin, Guillermo, 2018. "Better Spending for Better Lives: How Latin America and the Caribbean Can Do More with Less," IDB Publications (Books), Inter-American Development Bank, number 9152, May.
    3. Cavallo, Eduardo A. & Serebrisky, Tomás & Frisancho, Verónica & Karver, Jonathan & Powell, Andrew & Margot, Diego & Suárez-Alemán, Ancor & Fernández-Arias, Eduardo & Marzani, Matías & Berstein, Solang, 2016. "Saving for Development: How Latin America and the Caribbean Can Save More and Better," IDB Publications (Books), Inter-American Development Bank, number 7677, May.
    4. Manning, Nick & Mukherjee, Ranjana & Gokcekus, Omer, 2000. "Public officials and their institutional environment - an analytical model for assessing the impact of institutional change on public sector performance," Policy Research Working Paper Series 2427, The World Bank.
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