fiscal deficit

The country intends to contain the fiscal shortfall through a series of spending cuts and new income

Costa Rica closed 2020 with a fiscal deficit of 8.3% of GDP, the highest in recent decades although lower than the official projection, the government announced Monday.

The Costa Rican government predicts a fiscal deficit of up to 9.7% of GDP as a result of falling revenues and expenses related to the COVID-19 pandemic.

President Carlos Alvarado said that even with the fiscal tightness that the country is going through, the government has as a priority to attend to the needs of the population.

The Costa Rican government announced a plan that aims to consolidate finances and encourage economic growth without applying further taxes. 

The figure was given despite the fact that the country adopted a tax reform at the end of 2018 that included tax increases to address the deficit.

Costa Rica has turned to the international market in search of financing to cover its expenses due to a large fiscal deficit.

The World Bank representative also called for tax reform.

President Solís highlighted the healthy economy in his State of the Nation speech but offered no hints as to how his administration might change tack to achieve its specific goals, including fiscal reform.