In the first semester, the fiscal deficit of the non-financial public sector was 1.6% of GDP, registering an increase of almost $1 billion with respect to the same period in 2017.
From a statement issued by the Ministry of Economy:
The results of the Fiscal Balance of the Non-Financial Public Sector (SPNF), corresponding to the first semester of 2018, were presented by the Minister in charge of Economy and Finance, Eyda Varela de Chinchilla, at a press conference, which showed income totals in the order of B /. 5,723 million and total expenses of B /. 6.785 million.
The cost of not making decisions about the serious fiscal problem affecting Costa Rica "is incommensurable and has the potential to affect not only the economic but also the social and democratic order of the country."
This is the emphatic and clear position of the Comptroller General of the Republic of Costa Rica regarding the serious and risky situation in which the public finances of the country find themselves.Furthermore, as is well mentioned in the report "Fiscal and Budgetary Evolution I semester 2018", published recently by the institution, if decisions related to solving problems of short-term liquidity and modifying the structure of public expenditure to the medium and long term continue to be delayed, the cost to the country will be much more than just economic.
The law reform proposal put forward by the private sector includes the establishment of fiscal rules and multiannual budgets, among other changes.
The National Association of Private Enterprise (ANEP) explained that this initiative is part of a first phase of proposals that will be presented to the Sánchez Cerén administration in the coming months.
The fiscal deficit closed the first half of the year at 2.4% of GDP, up from 2.2% of GDP in June 2016, mainly due to an increase in the financial cost of debt.
From a statement issued by the Ministry of Finance:
At the end of the first half of 2017, the primary deficit (difference between income and interest-free expenses) remained similar to the previous year, at 0.9% of GDP.
Presenting a fiscal balance as a success while continuing to increase public debt is to disguise the fact that the government is still spending more than it collects.
"Even if a monkey dresses in silk, it is still a monkey"
EDITORIAL
The habit of the governments to spend more than what they earn is as old as the Spanish saying about the monkey dressed in silk. Fiscal indiscipline is a cancer that corrodes the foundations of economies, and in Latin America it has become a habit that even has defenders within the Academy.
The ICEFI points to a "chronic political inability to achieve comprehensive fiscal agreement" which is jeopardizing the sustainability of the state in the medium and long term.
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
The Central American Institute for Fiscal Studies -Icefi- assessed Costa Rica's budget for 2017, and as a result believes that if the prospects for medium and long term fiscal insufficiency are maintained, there is a serious risk of losing the social achievements of this Central American nation and accumulating fiscal deficits and public debt that could jeopardize the sustainability of the state in the medium and long term.Finally, he reiterated the need for a comprehensive fiscal agreement to ensure economic growth and social welfare in the country.
Standard & Poor's cites persistent difficulties in approving a fiscal reform in the short term, given the political fragmentation that exists in the Legislature.
Analyst Joydeep Mukherji said "... two previous governments have tried to make a fiscal reform and failed and that the government of Luis Guillermo Solis has had difficultyconvincing the Legislative Assembly ...".
A bill has been proposed to create a fiscal council to ensure that the public budget contemplates reasonable assumptions and meets the requirements of the Fiscal Responsibility Law.
The bill is being prepared by the Ministry of Economy and Finance, and its chief, Dulcidio de la Guardia, told Prensa.com that in addition the Fiscal Council, aims to create"...
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:
The tax reforms proposed by the Morales administration could include a new tax on telephony and increases in taxes on cement, hydropower and alcoholic beverages.
The amounts and characteristics of the taxes are still unknown, but at a meeting between representatives of Congress and the Executive Branch details were given on the productive activities that are included in the government proposal.
The government projects that the Panamanian economy will grow at an average annual rate of 6.3% over the next five years.
From the Ministry of Economy and Finance:
The Cabinet Council gave its approval to the Ministry of Economy and Finance (MEF), of the Medium Term Fiscal Framework 2017-2021, as set out in Article 18 of Law 34 of 2008, better known as Fiscal Social Responsibility Law.
The National Congress approved in a third and final debate a law that sets limits on the country's fiscal deficit and creates a new governing body for its macro fiscal policy.
From a statement issued by the National Congress of Honduras:
Tegucigalpa - The National Congress approved on a third and final debate, the whole of the Law on Transparency and Accountability, sent by the Executive and favorably dictated by a special commission, which includes topics such as putting a ceiling on current spending, public borrowing, staffing and establishing sanctions, among other issues.
Treasury data shows that in respect to income tax on legal persons, there was a 70% shortfall on potential revenue, representing 4.23% of GDP.
"... We are still finding fraud, smuggling, omissions, arrears and taxpayers taking advantage of weaknesses in our laws, they are still looking for ways to default on their obligations, therefore we are trying to improve controls and our tax laws," said Helio Fallas, Minister of Finance in Costa Rica.
Governments have agreed to extend for 60 days the negotiations to reach an agreement on conditions for the exchange of tax information.
The request to postpone the agreement, originally scheduled for September 30, was made by the negotiating committees to the respective ministries, in order to have more time to work on "... difficult issues" that have not yet been resolved.
This new list of tax havens is a collection of countries considered as such in at least 10 member countries of the European Union.
Despite some steps taken to establish international agreements on tax information and the adoption of other measures to avoid being considered a tax haven, Panama has been included in the list of 30 non-cooperative countries or territories on these issues by the European Commission.
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