The Economic Commission for Latin America and the Caribbean (ECLAC) indicated the levels of public debt of the central governments of 16 countries in the region.
In Latin American and Caribbean countries, the ratio of central government public debt to Gross Domestic Product (GDP) showed a slight drop at the beginning of 2022, which is mainly explained by the recovery of economic activity.
Although this decrease is the continuation of the trend that has been observed since 2021, by March 2022 the average public debt of 16 Latin American countries reached 52.1% of GDP, a figure 1.3 percentage points of GDP lower than at the close of 2021.
Central government gross public debt, by country, December 2021 and March 2022
In terms of sub-regions, in South America and the group of countries comprising Central America, Mexico and the Dominican Republic, public indebtedness levels reached 54.1% and 50.2% of GDP as of March of this year, respectively.
ECLAC stated that the levels of public debt as a proportion of GDP recorded between 2020 and 2022 show the vast need for financing required by the countries of the region to face the high costs of the pandemic.
Although improvements in public debt are observed in 2021 and 2022, its levels remain historically high, similar to those observed 20 years ago.
In Latin America, at the country level, Argentina had the highest level of public debt as of March 2022, with 80.1% of GDP, followed by Brazil with 78.5% of GDP, Costa Rica with 69.9% of GDP and Uruguay with 62% of GDP.
In contrast, ECLAC added in its report Economic Survey of Latin America and the Caribbean, the countries with the lowest levels of public debt were Guatemala with 29.6% of GDP, Paraguay with 31.1% and Peru with 31.2% of GDP.
ECLAC highlighted the impact of the dynamism of nominal GDP in the countries of the region on the dynamics of public debt as of March 2022.
As in the case of Brazil, whose level of indebtedness reached a reduction of 1.8 percentage points of GDP at that date with respect to the end of 2021, this fall is mainly explained by the interaction of different components of the dynamics of public debt, among which the contribution of the growth rate of output stands out.
For example, GDP growth generated a large reduction that managed to offset the increase in nominal interest accrued (Central Bank of Brazil, 2022).