No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeTopicsBusinessCosta Rica’s deficit hits 5.4 percent of GDP with no sign of...

Costa Rica’s deficit hits 5.4 percent of GDP with no sign of shrinking

Finance Minister Edgar Ayales announced Wednesday that Costa Rica’s deficit reached 5.4 percent of gross domestic product at the end of 2013, 1 percent higher than during 2012.

The increase pushed Costa Rica’s deficit to its largest in at least 10 years, roughly $2.7 billion, based on figures reported by the 2012 State of the Nation report and the Finance Ministry.

Ayales said that without fiscal reform in the coming year, Costa Rica’s deficit could “easily” exceed 6 percent of GDP.

The finance minister noted that since 2009 Costa Rica has only been able to collect tax revenues equal to roughly 13 percent of GDP, far less, he argued, than is needed to fund the government.

“Education alone is already 7 percent of GDP,” Ayales said, referring to the constitutional requirement for education spending, “That leaves just 6 percent for health care, security, housing” and other government services.

Public sector spending has grown at an average rate of 9.4 percent during the last three years.

Government interest payments rose to an amount equivalent to 0.5 percent of GDP during 2013 over 2012, according to the Finance Ministry presentation, more than any other segment of government spending.

As explained by Ayales, the increasing debt increases the amount of interest owed, thereby compounding the overall deficit problem.

The minister said that the country’s growing deficit is largely the result of automatic salary increases within the public sector. Several presidential candidates, including Otto Guevara of the Libertarian Movement Party, and Luis Guillermo Solís of the Citizen Action Party, have criticized such across-the-board salary increases within public institutions, such as the Costa Rican Social Security System.

Ayales said that a more rigorous tax system was needed to capture taxes due, and fight tax evasion, legal loopholes and contraband that have left the government coffers low.

Trending Now

Costa Rica’s Cutris Mining Bill Threatens Massive Environmental Damage

Costa Rica’s government is pushing a controversial bill that could open the entire Cutris district in San Carlos—848 square kilometers—to open-pit gold mining. The...

2025 Gold Cup: Honduras Advances After Dramatic Shootout, Mexico Ends Goal Drought

Honduras, with a surprising and dramatic penalty shootout victory over Panama, and Mexico, with a lackluster win against Saudi Arabia, advanced Saturday to the...

Former Costa Rican Minister Arrested for Drug Trafficking, Faces U.S. Extradition

Costa Rica’s judicial police arrested Celso Gamboa, a former security minister and Supreme Court judge, on Monday, following a U.S. request for his extradition...

Celso Gamboa Allegedly Ran Drug Ring with Costa Rican Government Ties

Celso Gamboa, once Costa Rica’s Security Minister and a Supreme Court judge, now faces extradition to the U.S. for leading a major cocaine trafficking...

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...

Costa Rica Identified as Key Maritime Route for Cocaine Trafficking

Costa Rica appears among the main maritime and aerial routes for cocaine trafficking between South and North America, according to the World Drug Report 2025 published...
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