This paper estimates the fiscal costs of population aging in Latin America and provides policy recommendations on reforms
needed to make these costs manageable. Although Latin American societies are still younger than most advanced economies, like
other emerging markets the region is already in a process of population aging that is expected to accelerate in the remainder
of the century. This will directly affect fiscal sustainability by putting pressure on public pension and health care systems
in the region that are already more burdened than, for example, in emerging Asia, a region with a similar demographic structure.
A stylized cross-country exercise, drawing on demographic projections from the United Nations and methodologies developed
by the IMF to derive public spending projections, is used to quantify long-term fiscal gaps generated by population aging
in 18 Latin American countries.
Several aspects of current pensions and health care systems in Latin Amer-ica make
the region's long-term fiscal positions particularly vulnerable to population aging.