• Costa Rica Real Estate

Costa Rica government to slash budget by $50 million

November 28, 2011

After days of tense negotiation, the Legislative Assembly voted Sunday night to trim Costa Rica’s budget by ₡25 billion ($50 million) in 2012. The largest cuts in the government budget will be in the Finance Ministry (₡9 billion), the Public Security Ministry (₡4 billion), and the Public Works and Transport Ministry (₡3.8 billion).

Costa Rica’s current fiscal deficit is expected to surpass $7 billion by the end of 2011. Slashing government expenditures, as well as the current tax reform proposal, which is expected to be voted on in the Legislative Assembly in mid-December, are considered the two most vital elements to re-establishing national financial stability.

On Sunday night, the approval of the 2012 budget narrowly passed with a 31-to-25 vote and was the first time since 1957 that the minority parties in the Legislative Assembly ratified a budget unsupported by the majority party. The majority National Liberation Party and the Libertarian Movement Party voted against the budget that was pushed through by the Citizen’s Action Party, Social Christian Unity Party and four other minority party’s aided the approval.

Though members of the ruling National Liberation Party voted against the budget approval, Luis Gerardo Villanueva, head of the party in the Legislative Assembly, applauded the transparency of the process.

“The important thing is that there was an understanding. We were able to sit and converse and demonstrate that we are able to arrive at agreements,” Villanueva said. “The government wanted to give examples of austerity with a single vote and the various budget cuts accepted accomplished that feat…In the end, we agree with the budget approved.”

For more on how the budget cuts will affect the 2012 economic landscape, see the Dec. 2 edition of The Tico Times.

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