IMF-OECD Conference Urges Latin America to Reignite Reforms for Inclusive Growth Amid Persistent Challenges

2025-11-26 · Market News · QuoteReporter

# IMF-OECD Conference Urges Latin America to Reignite Reforms for Inclusive Growth Amid Persistent Challenges

The IMF and OECD convened a high-level conference last week in Montevideo, Uruguay, titled “Making Reforms Happen in Latin America.” Organized to address the region’s sluggish growth and structural hurdles, the event brought together policymakers, experts, and leaders from Estonia and Ireland to share strategies for accelerating inclusive and sustainable development. Amid a global backdrop of trade tensions and inflation persistence, the discussions emphasized the urgent need for credible institutions, modernized regulations, and politically feasible reforms to tackle low productivity, high informality, and gender gaps.

### Key Themes: From Diagnosis to Actionable Reforms

The conference zeroed in on Latin America’s “lost decade” of subpar growth, where annual GDP expansion has averaged just 1.5% since 2010—far below the 3–4% needed to close income gaps with advanced economies. Speakers highlighted structural bottlenecks like inefficient labor markets, narrow tax bases, and regulatory rigidities that stifle competition and innovation.

– **Productivity and Informality:** OECD Secretary-General Mathias Cormann stressed reducing informality (affecting 50%+ of workers in some countries) through lower non-wage labor costs, expanded social protections, and skills alignment. Chile’s former Finance Minister Andrés Velasco noted that reforms must be “politically feasible,” requiring public trust to weather short-term pain.

– **Taxation and Fiscal Efficiency:** Panels called for broader-based, fairer tax systems with simplified compliance and reduced inefficient spending. Brazil’s recent VAT reform was cited as a model, potentially boosting revenues by 2% of GDP while curbing evasion.

– **Digital and Regulatory Modernization:** Estonia’s digital governance success (e-residency, e-voting) was showcased as a blueprint for LATAM to enhance competition and tech adoption. Uruguay’s Economy Minister Gabriel Oddone and Paraguay’s Finance Minister Carlos Fernández Valdovinos closed with commitments to prioritize labor market flexibility and innovation investment.

IMF Managing Director Kristalina Georgieva warned against complacency: “Latin America risks falling further behind without renewed momentum. Reforms must be coherent, institution-backed, and inclusive to unlock the region’s potential.”

### Economic Challenges: Data-Driven Wake-Up Call

The region grapples with vulnerabilities accumulated during stable periods: Productivity growth has stagnated at 0.5% annually (vs. 2% global average), informality hampers formal job creation, and gender gaps cost 1–2% of GDP yearly. Structural frictions exacerbate inequality, with the Gini coefficient averaging 0.48—highest among emerging markets.

Yet, opportunities abound: Digital readiness could add $1 trillion to GDP by 2030 (McKinsey est.), while green transitions offer export booms in renewables and agrotech.

### Recommendations: A Roadmap for Momentum

| Area | Key Actions | Expected Impact |
|—————————-|————-|—————–|
| **Institutions & Politics**| Build trust via transparent leadership; align reforms with electoral cycles | Higher compliance, sustained implementation. |
| **Labor Markets** | Cut non-wage costs, expand protections, upskill workers | Reduce informality by 10–15%, boost female participation +5%. |
| **Taxation** | Broaden bases, simplify rules, cut evasion | Revenue +1–2% GDP; fairer distribution. |
| **Regulation & Competition**| Modernize rules, foster digital innovation | Productivity +1% annually; FDI inflows +20%. |
| **Inclusion** | Address gender/skills gaps, invest in green tech | Inclusive growth, inequality drop 5–10 points. |

The conference, co-hosted by Uruguay’s government, underscores multilateral collaboration—echoing G20 priorities for EM reforms. As Georgieva concluded, “Latin America has the talent and resources; now it needs the political will to make reforms happen.”

For policymakers and investors: Prioritize countries like Chile and Uruguay (high reform scores per OECD) for opportunities in fintech and renewables. The event’s outcomes could shape 2026 IMF lending programs.

The full press release is available here:
https://www.imf.org/en/news/articles/2025/11/26/pr-25395-latin-america-imf-oecd-conference-calls-for-renewed-reform-momentum-to-boost-growth

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