Costa Rica: Fiscal Deficit is Unstoppable

The increase in government spending in the first eight months of 2012 is even higher than the increase observed in the same period last year.

Thursday, September 20, 2012

A statement from the Ministry of Finance reads:

• Deficit continues to grow despite efforts to control spending and reduce evasion
• Efforts to improve finance and control collections are strengthened

Tax revenues in the first eight months of the year reveal more dynamism in 2012 than last year. In August this year, its growth relative to 2011 was 10.4%, higher than the 9.1% growth seen in August last year.

"So far this year, sales and income tax, with cumulative growth of 12.2% and 13.2% respectively, have driven the increase of more than 10% of the current revenues of the Government, which certainly is good news", said Edgar Ayales, Minister of Finance.

On the other hand, central government expenditure up to August, accelerated slightly, with growth of 10.7%, higher than the 10.2% in the same period of 2011. While this year marks a slowdown in spending on salaries, goods and services and interest, in the areas of current transfers and capital costs there have been dramtic increases. Both items reflect strong growth, reflecting the priorities of this government: major increases in transfers are aimed at the Social Security Department and the education sector, while capital spending seeks to strengthen the educational infrastructure and works by Municipalities. The item of salaries, meanwhile still has controlled growth of 9.1%, lower than that of 2011, after incorporating the latest increases in salaries. '

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