No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeArchiveC.R. $178M in Black

C.R. $178M in Black

Thanks to improved tax collection that helped boost revenues by almost a third, the Costa Rican government finished 2007 with a budget surplus for the first time since the 1950s.
The surplus amounts to $178 million, about 0.65% of the year’s estimated gross domestic product (GDP). At the same time, though overall government spending in 2007 declined in real terms, new programs increased social spending.
Thelmo Vargas, a former finance minister and current consultant with economics think tanks Academia de Centroamerica and Econanalisis, called the surplus a “good sign” for foreign investors.
“Among other things, the good financial situation has been able to lower the public debt-to-GDP ratio, which is an element taken into account for estimating country risk,”Vargas wrote in an e-mail.
While the country’s healthy economic growth has had an effect on collection of tax revenues, another main driving factor has been the dramatic increase in tax collection, Vargas said.
Improved customs and import tax collection through the Information Technology for Customs Control (TICA) program, as well as better record keeping with new computer systems, helped increase the total revenue collected to $4.15 billion, a 28.4% increase over 2006.
Customs revenue accounted for 36% of the total and increased by about 30%, while income-tax collection posted the sharpest increase of 36%, to a little over $1 billion.
Sales-tax collection grew a little slower relative to those numbers, posting a 25% growth to $777.8 million.
As far as spending the bonanza, the biggest increase was in the “other expenses” column of the account book, which swelled 67% to $832 million and easily dwarfed all other categories except for salaries.
The Finance Ministry said in a statement that “other expenses” included sizable outlays to the National Roadway Council, to the country’s municipalities, to educational programs and to President Oscar Arias’ Avancemos program, which offers financial incentives for families to keep their children in school.
Even with the extras, government spending overall only increased by 8.56%, which in real terms marks a spending decrease, considering that inflation for 2007 finished off at 10.64%.
Vargas said he expected the government to use the surplus to continue to increase spending on social programs. Although the surplus is sustainable, he said he believes that improvement of the country’s infrastructure and the final passage of the bills to put the Central American Free-Trade Agreement with the United States (CAFTA) into effect are crucial to keep the gravy flowing.
 

Trending Now

U.S. – Guatemala Security Pact Targets Crime and Helps Returning Migrants

U.S. Secretary of Homeland Security Kristi Noem signed a border security cooperation agreement with Guatemala on Thursday, which includes the use of drones and...

Life After MS-13 in El Salvador as Residents Seek a Fragile Peace

Esperanza Martinez lost three relatives who were murdered and saw numerous bodies left in the streets of her neighborhood, a former stronghold of the...

Costa Rica and Panama Seek Gold Cup Glory Against North American Giants

With no Caribbean teams advancing, a Central American contingent made up of Panama, Costa Rica, Honduras, and Guatemala heads into the quarterfinals of the...

Climate Change in Costa Rica Devastates Coffee Farms in Los Santos

In Costa Rica’s Los Santos region, famous for producing nearly half the country’s coffee, farmers are reeling from heavy losses driven by wild weather....

Alligator Alcatraz: Trump’s Everglades Migrant Camp Draws Protests and Criticism

US President Donald Trump toured a new Florida migrant detention center dubbed "Alligator Alcatraz" on Tuesday, boasting about the harsh conditions and joking that...

An Expat’s Take: 5 Burning Questions About Life in Costa Rica Right Now

Have you been keeping up with the various events taking place in Costa Rica? There is always something interesting going down, and here are...
Avatar
spot_img
Costa Rica Tours
Costa Rica Coffee Maker Chorreador
Costa Rica Coffee Maker Chorreador
Costa Rica Travel Insurance
Costa Rica Rocking Chait
Costa Rica Travel

Latest News from Costa Rica