2013年-世界发展银行全球_A_Public_Expenditure_Review_for_Paraguay___The_Quest_for_Optimal_Tax_and_Expenditure_Policies_for_Shared_Prosperity_87页_1mb

Public Expenditure Review for Paraguay: The Quest for Optimal Tax and Expenditure Policies for Shared Prosperity

Core Content

This report, titled A Public Expenditure Review for Paraguay: The Quest for Optimal Tax and Expenditure Policies for Shared Prosperity, provides an analysis of Paraguay's fiscal policy and its role in promoting shared prosperity and reducing poverty and inequality. It outlines the current challenges, evaluates the effectiveness of fiscal policy, and proposes policy options to improve the system.

Main Challenges

1. Volatile Macroeconomic Environment

   • Paraguay's GDP growth has become more volatile in recent years compared to the previous decades.
   • This volatility complicates fiscal planning and forecasting.

2. Limited Fiscal Resources

   • Paraguay has a low tax-to-GDP ratio, which restricts spending on human development and growth-enhancing policies.
   • Social expenditure is also lower than that of regional peers, limiting the impact of fiscal policy on poverty and inequality.

3. High Levels of Poverty and Inequality

   • Despite poverty reduction since 2003, poverty and inequality remain high.
   • The country has one of the highest levels of inequality in Latin America, with a Gini coefficient indicating significant disparities.

Fiscal Policy and Social Progress

• Fiscal Consolidation and Stabilization

  • Fiscal consolidation was central to the economic stabilization program initiated in 2003.
  • Tax revenues increased from 8.7% of GDP in 2003 to 12.3% in 2012.
  • The overall fiscal surplus averaged 1% of GDP between 2004 and 2011.
  • Public debt decreased from 41% of GDP in 2002 to 12% in 2012.

• Role in Poverty Reduction

  • Fiscal policy has played a limited role in income redistribution due to low tax-to-GDP ratios and low social spending.
  • The conditional cash transfer (CCT) program is well-targeted but reaches only a quarter of the extreme poor.
  • Direct transfers provide minimal income support to the poor, averaging US$0.38 PPP per day.

• Equity of Opportunity

  • The Human Opportunity Index (HOI) shows Paraguay performs below the Latin America and the Caribbean (LAC) average but has improved faster than other countries since 2003.
  • Inequity in opportunity remains high in sectors like education and health, especially in access to basic services.

Efficiency of Public Spending

• International Comparison

  • Paraguay's public spending efficiency is lower than many other countries, particularly in education and health.
  • The country spends less on social sectors than its peers, and outcomes in these areas are relatively weak.

• Within-Country Differences

  • There are significant variations in expenditure efficiency across departments.
  • Better data at the departmental level is needed to understand the drivers of social outcomes.

• State-Owned Enterprises (SOEs)

  • SOEs provide a large share of basic public services but are inefficient.
  • Improving oversight and governance of SOEs could enhance service delivery and efficiency.

Policy Options

1. Managing Volatility

   • Introduce a fiscal responsibility law or stabilization fund.
   • Strengthen automatic stabilizers like unemployment insurance and social protection measures.

2. Tax Reforms

   • Eliminate significant tax exemptions, particularly in the agricultural and corporate sectors.
   • Reform value added tax (VAT) by removing exemptions for petrol imports and applying a uniform rate of 10%.
   • Base property taxes on market valuation to improve their effectiveness.

3. Increasing Tax Revenues

   • Reform direct taxes to increase their share in tax collections.
   • These reforms could help make the tax system more progressive and generate additional resources for social spending.

4. Enhancing Social Spending

   • Use additional revenues to improve targeting of public spending, especially in education, health, and water and sanitation.
   • Expand the coverage of social protection programs, including the CCT program.

5. Improving Data and Oversight

   • Continue to improve departmental-level data to better assess expenditure efficiency.
   • Enhance data on socio-economic and demographic indicators to inform policy decisions.

6. Participation in International Assessments

   • Engage in international assessments like PISA to benchmark education outcomes and guide policy improvements.

7. Strengthening SOEs

   • Implement a draft law for an independent SOE supervisory body.
   • Strengthen governance and oversight frameworks for SOEs.
   • Ensure sufficient supply and quality of basic public services.
   • Develop long- and medium-term investment plans to address infrastructure gaps.
   • Establish an investment system for SOEs and rules for managing debt and fiscal risk.

Key Findings

• Paraguay's fiscal system is regressive due to its heavy reliance on indirect taxes.
• Public spending in education and health is less progressive than in other Latin American countries.
• The CCT program is well-targeted but insufficient in coverage.
• There is a need to improve the efficiency of public spending and address structural inefficiencies in the SOE sector.
• Fiscal prudence is essential for maintaining macroeconomic stability and performance.
• The country must revert to tighter fiscal policies after the 2012 fiscal stimulus to avoid long-term fiscal imbalances.

Conclusion

The report emphasizes the importance of improving the tax and expenditure system in Paraguay to achieve shared prosperity and reduce poverty and inequality. It outlines several policy options that could enhance fiscal policy's effectiveness, including tax reforms, improved social spending targeting, and better management of SOEs. These measures are crucial for Paraguay to sustain its economic progress and improve social outcomes.