This increase should be available within two years in order to "... stabilize the size of the gap between government debt and gross domestic product (GDP) from 2019 and safeguard macroeconomic stability. "

The document issued by the International Monetary Fund (IMF) said that "... It is crucial that we adopt without delay the Value Added Tax (VAT) applying differentiated rates for basic foods, health services and education, because improvements to tax administration and the expenditure cuts being considered are insufficient. "

Elfinancierocr.com reports that "... In addition, if VAT and global income are adopted, the IMF says it would be advisable to make a third tranche of the fiscal adjustment needed in 2015 (1.25% of GDP) and make smaller steps in the next four years. "

Source: elfinancierocr.com

More on this topic

Guatemala: Public Debt Exceeds 23% of GDP

October 2018

Up to August, the external and internal public debt amounted to $18.463 billion, equivalent to 23.4% of the country's Gross Domestic Product.

According to figures from the Ministry of Public Finance, in the last nine years the debt to GDP ratio has slightly varied, between 23.3% and 24.8%.

IMF on Costa Rica: "Unsustainable Fiscal Imbalance"

December 2016

The favorable conditions in the global economy allowed the country to grow by 4.25% in 2016, and administrative efforts to reduce the fiscal deficit were noted, however they will not prevent the debt /GDP ratio from growing.

From a press release by the IMF:

• Costa Rica’s economy growing robustly, GDP expected to growth by 4.25% in 2016
• More needs to be done to stabilize public debt levels
• Key for government and Congress to reach consensus on VAT and income tax reforms proposals to help address fiscal imbalances

Costa Rica: Review of Tax Exemptions

November 2014

The Ministry of Finance is working on a bill that aims to review and eliminate tax exemptions that have no substantiated legal justification, and create a new regulatory framework.

According to the Ministry of Finance, income not received in 2013 due to the existence of exemptions and special tax regimes was equivalent to 5.93% of GDP, of which 3.7% corresponds to the General Sales Tax, 1, 9% to income tax and 0.3% for other taxes.

Costa Rica Announces Fiscal Consolidation Plan

October 2013

On top of the adoption of VAT, global migration tax, and global income tax already announced in previous plans, there is now a containment cost to be added through adjustments to the State payroll.

An article in Elfinancierocr.com reports that "The Ministry of Finance today released a discussion agenda which will later have to be submitted to the Legislative Assembly in the form of a draft tax reform which will, between cost savings and new revenue, generate 3.5 % of Gross Domestic Product (GDP) in five years. With this relief to public finances, the fiscal deficit would grow at rates that are more manageable than the 5% of the projected production for 2013. "