Costa Rica "will strengthen its fiscal sustainability by controlling expenditure and modernizing the tax system with a $350 million loan approved by the Inter-American Development Bank (IDB)."
During the controversy generated by the implementation of the fiscal reform in Costa Rica, the approval of a $350 million credit was announced to "support the country in the implementation of its fiscal reform program."
Completing reform of the tax authority, reducing smuggling and reforming the Tax Code are the basis of the proposal by the Association for Research and Social Studies.
From a statement issued by the Association for Research and Social Studies (ASIES):
Given the delicate situation of uncertainty and lack of direction found in Guatemala, ASIES believes it is part of its responsibility as a research center, to provide information to address the country's most critical problems. Therefore, in a press conference, the Board presented proposals for urgent action on economic, political, justice, social and environmental issues.
The Inter-American Development Bank has warned that it will make conditional a loan of $419 million for the 2016 on restructuring of the Tax Administration and adoption of anti-corruption measures.
The loans granted by institutions such as the Inter-American Development Bank (IDB) and the World Bank to Guatemala are in danger if key transparency aspects relating to the functioning of the Superintendency of Tax Administration (SAT) are not restructured, as well as the Law on Procurement and Contracting State.
With an adjustment permitted by law the fiscal deficit of the nonfinancial public sector totaled $1,034,000 at the end of 2015, equivalent to 2% of GDP.
Prensa.com reports that "...The total balance of the year showed a larger deficit of $1.460 billion (2.8% of GDP), but the government turned to a possible mechanism in the law which has to do with the absence of contributions to the Savings Fund of Panama in order to adjust the deficit to 2%, the limit set by the Social Fiscal Responsibility Law for the last year. "
"The defense and strengthening of the rule of law requires, as a starting point, enabling sound public finances. The rest is verbal pyrotechnics." Otton Solis.
EDITORIAL
Costa Rica is subject to a rare political situation, where the founder of the party in power and his first deputy, defends rationality as a tool of governance and for managing public finances, in the face of voluntarism in the matter on the part of the Executive, which adds more risk to the serious threat of the fiscal deficit inherited from previous governments, presenting a budget that increases state expenditures by 14%.
Between December 2013 and July this year, the total external debt balance increased by $458.8 million.
A quarterly report by the Central Bank of Nicaragua (BCN) shows that the country's foreign debt (including private and public debt) closed at $9,843.9 million this June.
Laprensa.com.ni reports that "... the $56.4 million in disbursements obtained between April and June were mainly for infrastructure projects, social services, health and education, as well as electricity, gas and water, public administration and to a lesser extent for agriculture programs and others. "
"Net contributors are providing less and less taxes in relation to the services they receive, while net receivers are demanding more and more benefits compared to what they provide."
Despite the relatively small size of government relative to the economy, a factor which some international analysts point to as a factor which undermines a country's development, "...
The board of the Tax Administration has decided to terminate the tender process which had been proposed for obtaining a contract for external consultancy on how to increase revenues.
Days after announcing an interest in convening an international tender for consultancy services to improve fiscal management, the board of the Superintendency of Tax Administration (SAT) has reversed the decision.
Instead of contracting international consulting company through a tender it has been proposed that the SAT should turn to the Inter-American Center of Tax Administrations and other lower-cost options.
Experts on tax matters in Guatemala are looking for alternatives to the government's proposal to hold an international competition for services for fiscal management, with one of the first suggestions being, "...
Replacing Sales Tax with VAT, applying a system of global income and maintaining exemptions in free zones are part of the projects being prepared by the government.
With the three projects he plans to introduce in the Legislature, the Executive leader intends to increase total tax revenue to 2% of GDP in two years and completely eliminate the primary deficit, which at the end of 2013 was 2.8% of GDP.
Tax authorities estimate that tax revenues could increase by 8%, and from the amount of growth in earnings, the consulting firm would charge 30%.
Although the competition for hiring a company to advise the government on the management of taxes has not been carried out, already questions are arising about the cost that such a contract will represent for the State.
Confirmation has been given in Guatemala of a tender for consulting services to improve tax collection which will be launched before the end of 2014.
Although Rodrigo Montufar, chief of the Superintendency of Tax Administration (SAT) of Guatemala ".... did not specify the date on which the contest might open, he estimated that next year they will have a contract with the respective company because it is an obligation of the Board to ensure that the taxation target is reached," reported S21.com.gt".
The agency believes that the investment rating is on shaky grounds due to the lack of progress on reforms to mitigate fiscal deterioration.
According to Gabriel Torres, principal analyst on sovereign debt, if a new tax bill is not created "it is likely to have a negative impact on the rating, a change in perspective."
As yet the agency has not provided its country report for this year, as they are waiting for a sign of change.
In the bidding held by the Costa Rican Ministry of Finance other bidders including JP Morgan, Barclays, Credit Suisse and HSBC have been ruled out.
The Costa Rican government announced that Citigroup and Deutsche Bank will be responsible for technical advice for the placement of up to $4 billion in Eurobonds.
Both their technical as well as economic proposals were the most favorable for the country, according to information from the Deputy Minister of Investment and Public Credit, Juan Carlos Pacheco.