The egg or the chicken?
Citizens generally ask for and even demand massive social spending without much thought about its implications, says Ocliver A. Rojas Gómez in his blog on the Fuerza Verde web site.
Friday, July 25, 2008
The market can't carry out all economic functions, he says, and so some of the responsibility has to be lodged with the State as a provider of social services.
The governments cash-strapped position is reflected by delays in payments, while it increases short-term public debt and the IMF has suspended the precautionary agreement.
The government announced a record investment in 2011, 3.76% percent of its gross domestic product (GDP).
The constant increase in Costa Rica's public debt seems unstoppable, which could generate "a sudden change in investor confidence" and force "a messy macroeconomic adjustment".
The institution is once again emphasizing more efficient public spending and making cuts before a fiscal adjustment comes into force, in a form that is "draconian and with emergency measures".
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