The Inter-American Development Bank approved two lines of credit totaling $500 million, resources that will be used by the Government to finance the public budget and policy reforms to ensure fiscal sustainability and maintain macroeconomic stability.
One of the approved lines incorporates contingency measures to increase spending related to the health emergency and targeted support to households and businesses affected by the crisis, informed the Inter-American Development Bank (IDB).
Because between 2018 and 2019, the consumer's fixed expense free budget in Costa Rica is estimated to have decreased from 18% to 14% of total revenue, four out of ten buyers made the decision to change brands, and two are considering doing the same.
A study presented by Elfinancierocr.com, explains that women are the most affected by the economic situation of the country, since they said that after subtracting all their fixed costs, they only have 12% of their budget.
The Alvarado administration presented to the Legislative Assembly the draft public budget for 2020, which will be 4.3% lower than 2019, thus representing the largest spending reduction in recent years.
A decrease in current spending, as well as a decrease in public sector institution positions and salaries, allowed the central government budget for 2020 to be lower than this year's, the Assembly reported.
In Costa Rica, an additional $12 million was approved for the construction project of the new Legislative Assembly headquarters, and part of the resources will be used to cover change orders in the construction of the building.
According to official documentation, ₡2.526 million ($4 million) will be used to fulfill change orders in the building's construction, ₡1.522 million ($2.4 million) were requested for exchange rate differential increases, ₡1.016 million ($1.6 million) for interest rate increases on loans granted and ₡2.589 million ($4.1 million) for working capital.
To address the fiscal disaster, the government is prioritizing current consumption by maintaining wages and inordinate current spending while cutting investments in education and infrastructure.
In the bill for the public budget for 2018, the Solis administration proposed reducing planned expenditure on infrastructure by 17%, and reduced the amount allocated to education from 7.62% of GDP to 7.4% of GDP, failing once more with the constitutional order to invest 8% of GDP in education.
According to Moody's, the plan to reduce expenses announced by President Solís will not be enough to solve the illiquidity problem being faced, nor to avoid a rise in local interest rates.
The plan to cut costs that are not mandatory in the budget, such as the suspension of public purchases that have not yet started to be implemented, will not be enough to avoid the impact of the fiscal deficit on local interest rates.This is the opinion of the rating agency Moody's, regarding the cost cutting plan announced by President Solis to address the fiscal problem that is affecting the country.
After recognizing the serious liquidity problems faced, the government has announced it will borrow another $1 billion for a hearty lunch that others will pay for tomorrow.
The $1 billion that the Central Bank of Costa Rica (BCCR) has been negotiating since May with the Latin American Reserve Fund (FLAR) to strengthen its reserves will arrive in October of this year, according to the BCCR authorities.
At the end of April, the Central Government's fiscal deficit stood at 1.7% of GDP, and total expenses grew mainly due to an increase in capital expenditure.
From a statement issued by the Ministry of Finance:
The fiscal results as of April 2017 show stable behavior in
The financial deficit accumulated up to August 2016 stands at 2.9% of GDP, slightly below the 3.6% recorded in the same period in 2015.
From a statement issued by the Ministry of Finance:
A reduction of ¢157,082 million in the financial deficit (revenues minus expenses), and a difference of seven percentage points between increased income and expenses, were the main fiscal figures of the Central Government recorded at the end of the second quarter of this year.
The 2017 budget drawn up by the government of Costa Rica is the result of an arithmetic exercise, where the political will of the Solis administration has barely reduced maintenance and has increased privileges in the dominant state corporations.
EDITORIAL
Scandalous could be the best word to describe the magnitude of the increase of 12% which the Solis Rivera administration has made in the 2017 public budget.The 12% increase not only far exceeds the projected inflation for this year, but is disproportionate and far from reality, considering the serious and urgent fiscal problem facing the country.
"In Costa Rica civil servants earn the most out of all Latin American countries, which is disproportionate to the economic and fiscal reality of the country."
An increase in resources for debt repayment, education and pensions account for the 12% increase in the 2017 budget compared to the 2016 budget.
According to a statement by the Ministry of Finance,"... the Bill for Fiscal Year 2017 is in the amount of ¢8.9 billion and is 12.1% higher than in 2016 ... due mainly to an increase in the debt settlement, resources for education and for the Ministry of Public Works and Transport. "
The accumulated financial deficit in July 2016 stood at 2.6% of GDP, slightly below the value at which it stood in the same month in 2015.
From a statement issued by the Ministry of Finance:
A reduction of ¢134,410 million in the financial deficit (revenues minus expenses), equivalent to more than half of GDP, and a difference of 7.3 percentage points between increased income and expenses, were the fiscal figures recorded for Central Government up to July this year.
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
Nicaragua is the only country in the isthmus that was left out of the list of countries that meet the "minimum requirements" for fiscal transparency, according to the State Department.
The "Fiscal Transparency Report 2016" by the US State Department, includes Guatemala, Costa Rica, Panama, Honduras and El Salvador in the list of countries which meet the minimum requirements for fiscal transparency, which the State Department bases on the public availability of information on the state budget and government contracts and tenders for the exploration and exploitation of natural resources, including methods of tendering and conditions for concessions.
The weight of interest from debts as a share of GDP went from 1.3% to 1.4% between June 2015 and December 2016.
From a statement issued by the Ministry of Finance:
A reduction of ¢121,358 million in the financial deficit (revenues minus expenses), was recorded in fiscal figures from the Central Government at the end of the first half of this year.
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