Fiscal Outlook in Central America

In one of the regions that receives the least amount of taxes in the world, the tax burden remained relatively stable in 2017.

Wednesday, February 28, 2018

From the section Fiscal Outlook for Central America, from the report "Macro-fiscal Profiles: 9th edition", by the Central American Institute of Fiscal Studies (Icefi):

In 2017, the fiscal trajectory of countries in the region remained relatively constant with respect to what was observed in 2016. The following are highlighted as policy orientations: a) lack of political agreements, which transformed into a real impossibility of increasing tax revenues through tax reforms or strengthening the administrative capacity of tax administrations, and b) implementation of austerity programs, which in several countries had a greater impact on capital expenditures, in order to avoid an increase in the fiscal deficit and public sector debt.  

Efforts to control spending had more tangible results in El Salvador and Honduras, where fiscal deficits were reduced and at least the rate of public debt growth slowed. 

In Guatemala, the level of spending also showed poor execution, but in this country, this is explained more by the executive's inability to implement public programs.

Costa Rica, for its part, failed to reduce spending as announced, largely because of provisions of judicial authorities that forced the Executive to reverse intentions in that regard. 

Read full report (in Spanish).

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