Like an invisible cancer, the fiscal deficit is severely limiting the government’s ability to take action, despite that fact that it has not yet produced the worst symptoms, like increased interest rates and inflation.
The negative effects of the rising fiscal deficit have still not really been felt by the population.
The prevailing level of liquidity in the financial system, due to the stability of the dollar, low international interest rates and the stability in the demand for credit has allowed domestic interest rates to remain relatively stable.
Increased public spending in Costa Rica, especially in the payment of wages, has become a threat to the entire economy and should be corrected by cuts or higher taxes.
Overspending in the public sector and in the decentralization of institutions has meant that for the present year, 2011, a higher deficit than ever before in the last ten years has been projected.
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