• Costa Rica Real Estate

Lawmakers compromise on reduced 2012 budget

December 2, 2011

After days of negotiation, legislators  voted Sunday night to trim Costa Rica’s $12 billion budget proposal for 2012 by $50 million. The largest cuts will affect the Finance Ministry ($18 million cut), the Public Security Ministry ($8 million) and the Public Works and Transport Ministry ($7.6 million). 

Costa Rica’s fiscal deficit is expected to exceed $7 billion by the year’s end. The budget reductions are aimed at getting the government’s finances back on track. A second component is passage of a tax reform bill, which will likely be voted on in coming weeks. 

On Sunday night, the 2012 budget narrowly passed a first round of voting by a 31 to 25 margin. It was the first time since 1957 that minority parties in the Legislative Assembly ratified a budget without support of the majority party. 

Lawmakers from the ruling National Liberation Party (PLN) and the Libertarian Movement Party voted against the budget bill, while members of the Citizen Action Party, Social Christian Unity Party and four other minority parties voted for the bill’s passage.

“I think the important thing is that there was an understanding,” said PLN legislative leader Luis Gerardo Villanueva. “We were able to sit and converse and demonstrate that we are able to reach an agreement.” 

On Tuesday night, the bill passed a final round of voting and will be sent to President Laura Chinchilla for signing. 

Other government agencies that will have a reduced 2012 budget are the Judicial Branch ($2.9 million cut), the Foreign Ministry ($2.2 million), Legislative Assembly ($2 million), the Agriculture and Livestock Ministry ($1.85 million) and the Supreme Elections Tribunal ($1.5 million).

For some government agencies, including the Culture Ministry and the Judicial Branch, the cuts were less than originally proposed last October. In recent weeks, groups of artists and Culture Ministry employees protested proposed spending cuts outside the National Museum in downtown San José. 

“The budget approved by the government for 2012 will not affect the Culture Ministry’s wallet, thanks to support by different political forces, the government and the artistic and cultural sector,” a Culture Ministry statement said. “It was necessary for the government to maintain the development of culture as a priority for the country, which was demonstrated in the first and second budget debates for 2012. For the first time, Culture Ministry projects were placed above or on the same level as other government priorities such as education, health, security and justice.” 

 The largest amount of government spending in 2012 is earmarked for public education, which will receive more than $3.16 billion. Other government agencies receiving large shares of the budget are the Labor Ministry, Public Works and Transport Ministry, Health Ministry and the Public Security Ministry.

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