Costa Rican State Increases Budget by 19%

Facing a serious and growing fiscal deficit, the Solís administration has presented the 2015 spending plan for the central government which is 19% higher than that of 2014.

Tuesday, September 2, 2014

Even though the fiscal deficit up to July is already located at 3% of GDP, the government has decided to increase the state budget for 2015 by 19%, which added to the 4% increase approved for public wages and 14% increase in the resources paid to state universities, threatens to push up interest rates and further complicate the economic scenario.

Economists polled by Nacion.com "... expect this growth will strangle loans to the private sector next year, the rating agency Moody's will remove the country's rating as investment grade, which is given to countries with less risk to invest in. In addition they also believe that the actions taken by the Government can not combat the large deficit. "The economist and former vice minister Edna Camacho added "... All of this shows that we should expect that the 2015 deficit will stay at a high level (above 6%) ... ".

The businessman Luis Mesalles noted that "... 'Efforts to improve collection are important (and necessary), but it does not seem to me that they will be able to raise enough to offset the increase in spending. '"

The Finance Minister Helio Fallas, explained that "... 'There is a large expenditure inflexibility; it is impossible to make a radical change. However, what we were able to do was to launch a series of programs, so that they are consistent with the priorities that the government has on the issue of poverty, infrastructure and agriculture.'"



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