No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeEconomyFinance Minister: Costa Rica needs drastic spending cuts

Finance Minister: Costa Rica needs drastic spending cuts

Costa Rica’s new Finance Minister, Rocío Aguilar, presented a package of drastic cuts to public spending at the Legislative Assembly on Wednesday and asked legislators to support a tax reform. Both efforts are designed to help the country address its fiscal deficit, which has reached 6.2 percent of GDP.

“This is the most important collection of spending reductions since the 1980s,” the minister said when she presented the package. She insisted that the measures will not mean public sector layoffs, nor will it affect social spending, such as poverty alleviation or housing projects.

 

The minister proposed administrative measures, decrees and laws that together would achieve zero growth in the 2019 budget and reduce salary incentives for public employees.

She also proposed a 30 percent reduction in travel expenses and transportation, 30 percent in publicity, 50 percent in official events and ceremonies, the renegotiation of rental agreements on government buildings, and a salary freeze for high-level employees as well as a government hiring freeze across the board.

These measures will reduce the deficit by points 1.6-1.7 percentage points in relation to GDP during the coming years.

Aguilar admitted that this will not resolve the deficit crisis, but said it would provide “a positive sign of Costa Rica’s commitment to credit rating [agencies] and multilateral organizations… These measures are not a solution, but rather the first phase of a national strategy that consists of a reform to public employment, institutional redesign, and a more progressive and modern tax system that fits the country’s productive reality.”

Costa Rica’s past four presidential administrations have attempted to approve a tax reform to address the growing fiscal deficit, but without success.

“Time has run out,” Aguilar said. “If we don’t act, the interest rates Costa Ricans pay on loans will rise, investment will shrink, job generation will drop and the cost of living will rise.”

 

Trending Now

Costa Rica’s Top Court Bans President Chaves from 2026 Election Campaign

Costa Rica’s Supreme Electoral Tribunal on Thursday barred President Rodrigo Chaves from participating in the 2026 election campaign, ruling that he "illegitimately used" his...

Costa Rica Hunts for Nicaraguan Hit Squad After Exile’s Assassination

Costa Rica’s Judicial Investigation Agency (OIJ) is investigating whether a hit squad tied to Nicaragua’s Ortega-Murillo regime is targeting exiled critics on its soil....

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 to Launch Electric Air Taxis for Sustainable Travel in Guanacaste

Costa Rica is poised to revolutionize its transportation landscape with the introduction of electric air taxis, offering a sustainable alternative to traditional ground travel...

Costa Rica and U.S. Strengthen Border Scans and Biometric Cooperation

U.S. Secretary of Homeland Security Kristi Noem met Wednesday with Honduran President Xiomara Castro to discuss security and migration, following her offer in Costa...

Costa Rica Maintains Economic Stability Amid Global Tensions

Costa Rica is holding steady economically despite global tensions sparked by conflicts involving Israel, the United States, and Iran, according to Federico Quesada Chaves,...
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