Lag in AI threatens fiscal sustainability in Latin America: ECLAC

The lag in the adoption of artificial intelligence (AI) by governments may limit their ability to strengthen fiscal sustainability, declared today the Economic Commission for Latin America and the Caribbean (ECLAC).

The organization explained that in a context of accelerated digital transformation and growing fiscal pressures, AI is a strategic factor that can strengthen or weaken the institutional capacities of the State.

In the study published by ECLAC: Artificial intelligence in tax administrations: recommendations for implementing itconducted by Guillermo Peredo, it is mentioned that Brazil and Mexico are the only Latin American countries that appear among the 30 nations with the largest number of AI companies in the world.

“However, the incorporation of this technology in the regional public sector remains limited,” he highlighted.

Only nine countries have published official national strategies on the matter: Argentina, Brazil, Chile, Colombia, Costa Rica, Cuba, Peru, Dominican Republic and Uruguay.

“The investment gap is also considerable. Latin America as a whole allocated 11.59 billion dollars to AI in 2023, compared to 87.19 billion in the United States, 63.18 billion in Europe and 29.2 billion in China,” he detailed.

A comparative exercise carried out by the Organization for Economic Cooperation and Development (OECD) showed that more than 52 percent of the countries analyzed use AI in risk analysis and 49 percent use it to detect tax evasion and fraud.

In Latin America and the Caribbean, 11 of the 14 countries analyzed reported its application in at least one tax area.

The study indicates that strategically adopting AI can improve taxpayer services, strengthen oversight through predictive models, and optimize collection.

In turn, for the use of AI in the tax field, the author proposes making a comprehensive diagnosis and a national AI strategy, as well as a regulatory and governance framework for data, technological infrastructure and human talent.

These elements are part of the strengthening of the technical, operational, political and prospective capacities of public institutions.

Latin America faces a window of opportunity if artificial intelligence is implemented with solid institutional capabilities and clear ethical criteria.

“It can strengthen fiscal sustainability and equity. Otherwise, it could become a new factor of structural divergence,” he warned.