The financial deficit up to October 2017 reached 4.6% of GDP, above the 3.9% registered at October 2016.
From a statement issued by the Ministry of Finance:
The fiscal results up to October show the urgent need to have an integral tax reform (via income and expenses), that allows for sustainability in state finances, as well as guaranteeing its operation.Therefore, in order to provide a structural solution to the fiscal problem and reverse the trend of these results, the Government recently presented a new Project for Strengthening Public Finances, which seeks to bring political positions closer to reaching a consensus that will allow for an agreement to be made to clean up the Central Government's economic situation.
The lack of long-term solutions for reducing the fiscal deficit and improving the structure of public spending threaten the investment grade rating given by Moody's in 2010.
Economist and former president of the Central Bank, Francisco de Paula Gutiérrez, warned that "... 'On the issue of the deficit we are kicking the ball forward believing we have an infinite amount of time. We are spending very unwisely.'"
In January 2014, current account expenditure increased by almost 8% compared to January 2013, with the category of Remuneration up 11%.
The monthly figures from the Central Government Revenues, Expenditures and Financing report published by the Ministry of Finance of Costa Rica, shows that the increase in total revenues in January 2014 was almost 11%, which meant a reduction in the fiscal deficit financial compared to GDP of 0.7%.
From January to November 2013, the fiscal deficit reached $2.270 billion, 4.6% of the national production, 25% more than that accumulated up to November 2012.
Market Pulse Blog Aldesa:
Costa Rica: How much does the government borrow per day?
Every day operations made by the Government, and therefore by all Costa Ricans, add up to an additional ₡1.796 million of new debt.
The Central American Institute for Fiscal Studies has highlighted the unsustainability of the fiscal deficit in Costa Rica, El Salvador, Guatemala and Honduras.
Pensalibre.com reports that "... according to the results of a report by the Central Institute for Fiscal Studies (Icefi) submitted yesterday ... Guatemala, El Salvador, Honduras and Costa Rica find themselves with in unsustainable scenarios regarding public debt in the next few years. "
The country ranks third in Latin America in terms of the difference between income and expenditure in relation to GDP.
In 2012, government revenues totaled 14.4% of GDP while expenditures were 18.8%.
Data from the Economic Commission for Latin America and the Caribbean (ECLAC), reveals that compared with 2007 figures the country shows a significant deterioration .
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.
"This increase in revenue pales in comparison to the rise of 13.1% in central government spending."
In a worst case scenario, debt could climb to 50% of GDP within 2 years.
According to economist Thelmo Vargas, a partner at the consulting firm Ecoanálisis, the forecast is of a base scenario in which interest rates are 5%, the economy grows at a rate of 4% and a primary deficit of 3% is registered for production.
"However, in a scenario with more pessimistic assumptions, Government obligations could grow from 38.7% of GDP expected for 2013 to 50.3% of production in 2015," noted an article in Elfinancierocr.com.
During the first month of 2013 government spending was 16% higher than in January 2012, while income rose by 8.4%.
Crhoy.com reports that "In general, the central government deficit during the first month of the year stood at 0.84% as a proportion of gross domestic product (GDP). Meanwhile, interest expenses increased in the order of 36%, whereas a year earlier it increased in the order of 10.1%. "
In November, the balance between government revenues and expenditures showed a deficit equivalent to 4% of GDP.
In November the government deficit amounted to $ 1.82 billion, or 4% of the gross domestic product (GDP), the same level as in 2010. Nevertheless, in 2010 the shortfall was lower, at $ 1.52 billion. Of the $1.82 billion shortage the government needs to cover its running costs, $1.12 billion were financed with domestic debt and $700 million with external debt.
The 10% increase in revenues will offset the 9.5% increase in central government spending, leaving the fiscal deficit at 3.5% of GDP, slightly below the October 2012 cumulative.
A statement from the Ministry of Finance reads:
Government deficit to October is slightly lower than in the same period last year
• Net domestic financing of the government (including recourse to external debt amortization) was 4.2% of GDP, down from 4.3% in the same period of 2011
The increase in government spending in the first eight months of 2012 is even higher than the increase observed in the same period last year.
A statement from the Ministry of Finance reads:
• Deficit continues to grow despite efforts to control spending and reduce evasion
• Efforts to improve finance and control collections are strengthened
Tax revenues in the first eight months of the year reveal more dynamism in 2012 than last year.
This will be the second consecutive year that Costa Rica has the highest fiscal deficit in the region.
The International Monetary Fund states that the difference between revenues and expenditures of the government of Costa Rica at the end of 2011 amounted to 5.6% of GDP. The Finance Minister Fernando Herrero said that this deficit is 5%.
So far the country has had "some margin" in terms of the capacity to handle the deficit with debt, but economists point out that this gap will disappear if appropriate tax solutions are not found quickly.
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