Between 2014 and 2017, the fiscal deficit increased to an average of 1.4% of GDP, and for this year the authorities plan to end at 1.6% and in 2019 it could increase to 2.5%.
Representatives of the Ministry of Public Finance informed that some of the increase in the fiscal deficit foreseen for next year will be caused by the fact that the General Budget of Income and Expenditure of the State for Fiscal Year 2019, which will ascend to $11,390 million, will allow assigning more resources for infrastructure maintenance.
"Public debt in terms of simple average for the Central American region will continue growing, reaching 43.1% of GDP in 2018, after having registered 42.5% in 2017."
The Central American Institute of Fiscal Studies (Icefi) estimates that for the current year the size of public expenditure of the Central Government in relation to the respective Gross Domestic Product of each country will be 21.4% in Costa Rica, 20.4% in El Salvador, 20% in Honduras, 18.4% in Nicaragua, 17.6% in Panama and 12.1% in Guatemala.
El Salvador's Congress approved an IDB loan of $350 million to finance the government budget deficit at a 3.25% rate.
The president of the Legislative Assembly, Norman Quijano, stated that " ..." with the conditions offered by the IDB we will have an interest rate estimated at 3.25%, with the bonds we had an average rate of 7 and 8%, the reduction of interests will mean a saving of tens of millions of dollars for the country.' "
During the first quarter of the year, the country's trade deficit totaled $1.614 billion, which is 9% higher than the $1.479 billion reported in the same period in 2017.
The Banco de Guatemala reported that as of March 2018 "... The total amount of General Trade exports stood at US $2.8598 billion, lower by US $48.3 million (-1.7%) than the amount registered in March 2017 (US $2.9081 billion).The most important products according to their share in the total value of exports were: Articles of Clothing with US $346.3 million (12.1%); Sugar with US $249.7 million (8.7%); Bananas with US $196.0 million (6.9%); Coffee with US $191.2 million (6.7%) and Cardamom with $146.8 million (5.1%).These products represented 39.5% of total exports."
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.
Between May 2016 and May this year the primary deficit went from 0.9% of GDP to 1%, while the financial deficit increased from 1.9% to 2.1% in the same period.
From a statement issued by the Ministry of Finance:
The primary deficit and the fiscal deficit, which had been similar between 2016 and 2017, show a slight deterioration in May of this year which should draw the attention of all social sectors. The primary deficit went from 0.9% of GDP to 1% from May 2016 to May 2017; While the fiscal deficit went from 1.9% to 2.1% in the same period.
The 2014/15 agricultural crop tomato for industrial use will not be enough to meet local demand, which will face a shortfall of 1,578 metric tons.
In order to make up the deficit in industrial tomatos an auction will be held on April 23 at the National Commodity Exchange. "... The selected product will be allowed to enter the country from 28 April to 31 December 2015, according to the verdict of the National Commission on Commodity Exchanges. "
According to the ratings agency the political polarization that characterizes the Legislature which will take office on May 1 could hamper the implementation of the fiscal reforms that the country needs.
From an article by Fitch Ratings:
El Salvador's New Legislature May Yield Fiscal Restraint
Fitch Ratings-New York-23 March 2015: Gains by opposition parties in El Salvador's legislative assembly could result in a compromise to improve the sustainability of public finances but political polarization is likely to continue weighing on the prospects for growth-enhancing and security reforms, Fitch Ratings says.
The need to borrow every month in order to pay current account expenses is the main cause of the continuing increase in the central government's debt to GDP ratio.
At the end of 2014, total public debt, which includes the Central Bank of Costa Rica and other public sector entities represented 58.6% of all production. Rodrigo Bolaños, president of the Central Bank, said that "...
As part of a plan to reduce the fiscal deficit, the Finance Ministry is preparing a bill which aims to amend the existing tax exemptions scheme.
This project also seeks to create penalties for 1,259 misuse of tax breaks reported by the Technical Services Department up until 2014. It is anticipated that the initiative will be submitted to the Legislature in no more than two weeks.
Fitch Ratings has affirmed the BBB rating with stable outlook, anticipating the positive effects of the Canal expansion for the logistics sector and for overall economic performance.
From a statement issued by from Fitch Ratings:
Fitch Ratings has affirmed the foreign currency rating for Panama's long-term and local currency issuer ratings at 'BBB'.
Experts are warning that the rapid growth of public spending could have negative implications if conditions change in the economic environment.
After the Ministry of Finance raised the ceiling on the deficit for the nonfinancial public sector to 4.1% at the end of September 2014, there are now significant differences between income and expenses, resulting in a deficit of $2.07 billion.
The productive sectors have indicated that the state budget approved for 2015 is underfinanced and will force the government to raise taxes or issue more debt in order to comply with it.
The approved general budget for the nation is $4.824 billion an amount which according to the private sector can not be covered by current tax revenues, therefore in order to raise this amount there must be either be cuts made to services such as subsidies or social programs, increases or creation of more taxes, or more debt taken on.
The International Coffee Organization estimates that global demand will reach 175 million sacks of 60 kilos in 2020, driven by the markets of China, South Korea and Russia.
The sophistication of consumers and a growing preference for coffee in markets such as South Korea, China and Russia will be part of the main factors driving the increase in demand for the grain in the coming years.
A recently passed tax moratorium law includes several changes related to public finances, the Canal contributions and even exemptions for agricultural, livestock and aquaculture.
The passage of the tax moratorium law brought changes that support the State not only in increase the level of debt to GDP, but also includes tax adjustments and the fact that "...
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