• Costa Rica Real Estate

Solís: No cuts to education, security budgets in 2016

August 31, 2015

In his weekly television address to the nation, Costa Rican President Luis Guillermo Solís said there would be no new cuts to public education, security or anti-poverty spending, despite more than $726 million in proposed reductions in his 2016 budget proposal.

The administration’s 2016 budget proposal will be presented in full on Tuesday but Solís previewed some details Sunday night. He said the budget would represent the “smallest [spending] increase in 10 years” — 0.5 percent over the ₡7.9 trillion ($14.5 billion) 2015 budget, the largest ever in Costa Rican history.

Solís said more than 99 percent of the proposed cuts would affect the executive branch. The president also highlighted his administration’s attempts to reign in spending, including a 36 percent decrease in spending on publicity, a 30 percent decrease in spending on international travel, and a 17 percent reduction in consulting expenses.

In his Sunday address, the president reiterated his call to lawmakers to pass his administration’s tax reform bill to help close the country’s budget deficit. The legislature’s governing coalition of National Liberation Party and Social Christian Unity Party members has said that new taxes are not part of their legislative agenda.

The legislature’s inability to enact fiscal reform has been a significant contributor to Costa Rica’s falling sovereign debt rating. Last year, Moody’s Investor Services, Fitch, and Standard & Poor’s downgraded the country’s sovereign debt to junk status.

According to Costa Rican law, the executive branch must present its budget to the Assembly for the coming calendar year every Sept. 1. The legislature has until November 30 to approve the budget.

Despite significant pushback to the Solís administration’s 2015 budget, lawmakers were unable to come to an agreement on cuts and it was passed as proposed. The president would be lucky to see the same result twice.

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