The Deterioration in Costa Rica's Finances

The fiscal deficit is pushing interest rates up, and the Treasury Minister announced a resolution to create a new tax that will generate additional income.

Monday, June 22, 2009

The Pulso Bursátil de Aldesa newsletter analyzes the situation of the deficit in the government’s coffers, which has been seriously affected by the decrease in tax collections and, on the other hand, by the increase in expenditures.

“According the Ministry of the Treasury, as of May the financial deficit increased to ¢181.239 billion. During the first five months of this year, the central government’s accounts reflected a slowdown in income of 8.5% in comparison with the same period of 2008. The income generated by income taxes fell 7.0% in inter-annual terms, and customs taxes showed a contraction of 23.7%. The category “other taxable incomes” increased 11.1%, and the tax revenue from sales and consumption reported an increase of 2.0% and 5.9%, respectively. For their part, total expenditures increased 27.3%, mainly from the 32.8% increase in payroll and the inter-annual increase of 41.8% in the Higher Education fund.”

More on this topic

Costa Rica: Interest Rates Rise Due to Fiscal Deficit of 5.4%

January 2014

Interest rates usually rise when there is pressure exerted by the Government raising money in colones to finance its deficit.

2013 ended with a deficit of 5.4%, a level not seen since 1995 and one which could lead to an increase in interest rates.

"... Income tax collections grew by only 9%, affected by the slow growth in receipts from General Sales Tax.

Costa Rica: Fiscal Deficit Less than 2% of GDP

June 2013

While up to May Finance revenue grew by 10% interannually, Central Government expenditure increased by 13.1%.

"Finance revenue grew by 10% interannually up to May, driven especially by the collection of income tax, tributes which recorded a growth of 11.7% in May," noted an article in Elfinancierocr.com.

Costa Rica: Public Spending Up 18%, Revenue 5%

June 2010

In the first five months of 2010, the fiscal deficit was $670 million, 86% more than the same period of 2009.

An article in Nacion.com notes that “the deficit accounted for 1.93% of the country’s production. The Treasury expects the deficit to represent 4.8% of the GDP by the end of the year”.

Fiscal Deficit Increases in Costa Rica

May 2009

The finances of the Central Government of Costa Rica continued to show a marked deterioration. Up to and including April, the financial deficit stood at $222 million.

In the first quarter of this year, the results of the accounts of the Central Government showed a decline of 8.5% in revenue over the same period in 2008.

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