SOUTH AMERICA - The International Monetary Fund (IMF) has called for reforms across all Latin America as contributions are "often inadequate".
In its regional economic outlook for the Western hemisphere, the IMF said there was a need to reform the public pension systems across Latin America.
"Beneficiaries of these systems tend to come from higher-income groups and contributions are often inadequate to cover benefits over the longer term," the fund noted.
Although the track record on such reforms across the region had been mixed, the IMF said some progress had been made in Barbados, Panama, and Peru.
But the IMF said some reforms already carried out had backfired. Some had aimed at reducing the negative effect of high nonwage costs, but ended up increasing such costs. Examples given by the IMF were the raises in pension contributions in Colombia and Peru.
Reform, if well designed, can benefit equity beyond the positive influence of sound fiscal policy on macroeconomic stability, the IMF explained.
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