Costa Rican State Consumes 26% of GDP

In relation to GDP, the expenses of the Costa Rican state are the highest in Central America.

Thursday, September 19, 2013

This was revealed by a survey conducted by the Central American Institute for Fiscal Studies (Icefi). Second place is occupied by the Government of Panama with 23% of GDP followed by Guatemala which has one of the lowest with 15.1% of production.

Costa Rica is the only Central American country which plans to increase current spending to a total of 18.6% of GDP, also the highest in the region. "... The tax burden is not enough to fund the standard of living in terms of public service delivery," said Renato Vargas Icefi analyst.

Elfinancierocr.com reports: "Income from revenue for the Costa Rica public purse is estimated by the Institute at 14.7% of production. The shortfall of 11.2% of GDP has to be paid for with loans. "

"The Icefi suggests that Costa Rica modernize its tax policy and improve tax revenues, make public spending more effective and transparent and use debt strategically," says

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More on this topic

Poor Prognosis for Public Finances in Costa Rica

September 2013

The Finance Minister himself described the Costa Rican financial situation as "fragile and unsustainable" .

An editorial in Elfinancierocr.com notes that "In the next few months Ayales's management in light of public finances will be very difficult for four reasons."

Among these reasons is the electoral political situation, which ensures an increase in public spending because of the need to complete at least some projects before the end of the current term, and especially because of the actions of pressure groups demanding government concessions.

Panama: Government Spending 10% More on Wages

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Between January and July 2011, the state’s payroll totaled $1,098 million.

Government spending on salaries has shown a significant increase compared to the previous year, according to a report by the Controler from July, which reveals that the of the total expenses, 40% relates to the Ministry of Education.

Costa Rica's 2011 Budget

December 2010

More government spending -> more debt -> more expensive credit and more taxes. The State continues to fatten at the expense of the productive sector.

Juan Carlos Hidalgo, in his blog at Elfinanciero.com, begins his article calling the 2011 budget approved by the Legislative Assembly as “illegal”. He explains that current expenditures are included as investments, which is specifically prohibited by the National Budget Law.

Fiscal Deficit Up 70% in Costa Rica

September 2010

In the first eight months of 2010 the deficit totaled $997 million, 70% more than the same period of 2009, as a result of stagnant revenue and increased spending.

State revenues are still below 2008 levels, and spending has increased considerably, mainly in salaries, social programs and pensions.

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