Latin America and the Caribbean face a serious savings problem, said Tomás Serebrisky and Eduardo Carvallo, researchers and editors of the book ‘Ahorrar para Desarrollarse: Cómo América Latina y el Caribe pueden ahorrar más y mejor’ ('Save to develop: How Latin America and the Caribbean can save more and better'), edited by the IDB and presented on Monday, October 17 at Universidad del Pacífico.
The countries of the region save less than 20% of the gross domestic product (GDP) on average. That is, between 10 and 15 percentage points lower than the most dynamic countries in emerging Asia. The publication also highlights that investment rates are lower than would be needed to sustain high rates of economic growth.
"Countries must save to ensure a better future," said Serebrisky. In this regard, the publication proposes saving not as protection against adverse and difficult times, but as a way for economic development that benefits individuals, businesses and governments.
"According to the Commission on Growth and Development, countries [in the region] must invest 25% of their GDP. That level has never been reached", said Eduardo Cavallo.
Renzo Rossini, General Manager of the Central Reserve Bank of Peru (BCRP)
Noelia Bernal, researcher at Universidad del Pacífico
The pension systems challenge
One of the most important aspects of savings in countries of Latin America and the Caribbean has to do with pension systems. The book argues that these systems face serious problems in the region.
"Many people take part in the capitalization system but after a while they become unemployed. Then they return. And because they did not contribute enough, they retire with a lower pension than they thought they would get", said Serebrisky. The solution proposed today, according to the researcher, is "politically complicated", because it implies increasing contributions and to do this "you have to see who will pay for that".
For Solange Bernstein, researcher at the IDB, pension systems "have low coverage and design problems with implications on the systems sustainability, equity and efficiency."
In this context, Elio Sanchez, General Superintendent of Pension Supervision at the Superintendency of Banking and Insurance (SBS) pointed out that Peru is already seeking to form a commission to reform the pension system. However, a reform of the pension system would not be sufficient on its own, according to Noelia Bernal, Professor in the Academic Department of Economics at Universidad del Pacífico, since it must be accompanied by a labor reform.
Eduardo Cavallo, lead research economist at the IDB
Tomás Serebrisky, IDB Economist
How to save better
Some of the proposals for our country to achieve better savings go through better regulation, macroeconomic stability, and quality infrastructure: ports, roads, railways, and communication networks.
"We need to think of savings as a State policy. Create a culture of savings to achieve the development goals we seek," said Eduardo Cavallo.
About the book presentation
The book ‘Ahorrar para Desarrollarse: Cómo América Latina y el Caribe pueden ahorrar más y mejor’ ('Save to develop: How Latin America and the Caribbean can save more and better'), edited by the Inter-American Development Bank (IDB) was presented on Monday, October 17 at Universidad del Pacífico (UP). The book presentation featured the opening words by Roberto Urrunaga, Dean of the School of Economics and Finance at UP; as well as comments by Renzo Rossini, General Manager of the Central Reserve Bank of Peru; Hugo Perea, Manager of Economic Studies at BBVA; Solange Bernstein, IDB pension specialist; Noelia Bernal, Professor in the Academic Department of Economics at UP; Elmer Cuba, Chief Economist at Macroconsult; Eduardo Morón, President of APESEG and professor in the Academic Department of Economics at UP; and Elio Sanchez, General Superintendent of Pension Supervision at SBS.