Costa Rica made “significant” economic progress after the economic crisis caused by the coronavirus pandemic but needs “structural reforms” to move forward, OECD Secretary-General Mathias Cormann said Monday.
“Costa Rica has made significant progress in recent years,” said the representative of the Organization for Economic Co-operation and Development during the presentation in San José of the report “OECD Economic Surveys: Costa Rica 2023”.
However, “in order for it to maintain its achievements and continue to raise the standard of living of its citizens” the Central American country must “implement new reforms to strengthen public finances, boost productivity and improve education outcomes”.
The international organization’s publication applauded the efforts of Costa Rica, which joined the OECD in 2021, to strengthen its exports and adopt a “well-defined” fiscal response.
The study forecasts Costa Rica’s GDP growth of 2.3% in 2023, although the Central Bank of Costa Rica estimates 2.7%.
Cormann, who presented the report together with President Rodrigo Chaves, stressed that the country must make reforms to “increase competition, improve the quality of education and make the tax system fairer by gradually eliminating tax exemptions” to stimulate growth.
The study points out that “it is essential” to reduce the fiscal deficit due to Costa Rica’s public debt of 70% of GDP.
It also highlights the importance of promoting changes to reduce the 45% of informal employment that exists, broaden the tax base and improve the tax structure because tax collection “is lower than most OECD countries and tax expenditures are high (4% of GDP in 2021).”
“Weak productivity and a rapidly aging workforce will weigh on growth in the future,” the OECD study predicts.