San José, Costa Rica, since 1956

Budget Worries Officials, Austerity Measures Would Affect Schools, Roads,

Education, public works and other CostaRican officials are expressing concern about theausterity measures and budget slashes PresidentAbel Pacheco and the Finance Ministry arethreatening to implement as part of the government’sbudget for 2005.The measures, which include not building anynew schools and not hiring any new teachers,national park guards or police officers, and reducingfunds for road repair and maintenance, aremeant to compensate for the failure of the proposedPermanent Fiscal Reform Package – a tax planwhose future, after more than two years of legislativedebate, remains in doubt (see separate article).The government’s proposed budget, which is expectedto be submitted to the Legislative Assembly on Sept.1, totals ¢1.4 trillion ($3.19 billion) – nearly 10% morethan the 2004 budget. However, taking into accountinflation, which is expected to reach 11% this year, thebudget is smaller in real terms.PACHECO and Finance Minister Alberto Dent havesaid they will overturn the proposed budget slashes and austerity measures by issuing an extraordinarybudget if the fiscal reform is approvedbefore the end of the year – somethingonly possible if the ConstitutionalChamber of the Supreme Court (Sala IV)rejects several unconstitutionality actionsfiled against the way the tax plan has beendebated in Congress.The tax plan would provide the governmentwith additional revenues equalto 2.56% of the country’s gross domesticproduct (GDP). Under this scenario, anamount equal to 1% of the GDP, approximately¢95.8 billion ($218 million),could be set aside for social programsand other expenses, while still reducingthe fiscal deficit, according to theFinance Ministry.EDUCATION will be among the sectorshardest hit by the cost-cutting measures.The proposed budget will cancel thePublic Education Ministry’s plans to hire2,000 new full-time teachers next year, aswell as build 75 new elementary schools,high schools and teleconferencing-styleschools in remote areas.Marlen Gómez, Vice-Minister ofEducation, says the measures will reducethe quality of Costa Rican education.“In education, it’s difficult to take measuresthat can substitute the hiring of newteachers or the building of new schools,”Gómez said.Gómez said she and Education MinisterManuel Antonio Bolaños have met withDent several times to discuss their concernsabout the budget. Each time, they were toldthe ministry’s funding depended on theapproval of the proposed tax bill.“It’s now in the Legislative Assembly’shands to deal with the tax plan,” she said.“Once legislators approve it, it will be possibleto increase the education budget.”Eduardo Rojas, president of theNational Association of Educators(ANDE), said the government has no rightto condition the education budget on thetax plan’s approval.“I believe that reducing funding foreducation, given the problems that alreadyexist, is crazy,” Rojas told The Tico Times.“The consequences would be fatal. Itwould a step backward.”Many schools, particularly rural ones,already suffer from a shortage of desks andcrumbling infrastructure (TT, Feb. 13).THE austerity measures would alsoaffect spending at the country’s under fundedand understaffed national parks byfreezing spending at current levels. Furthercuts would require drastic actions, accordingto Environment Ministry officials.“If we receive additional budget cuts,we might be forced to take emergencyactions, such as closing protected areas (tothe public),” warned Fausto Alfaro, directorof the Arenal-Huetar Norte ConservationArea, which oversees protectedareas in most of the country’s NorthernZone. “Less funding would reduce thenumber of complaints we can respond to –to the detriment of the country’s biodiversity.”The conservation area’s staff of 62 – aquarter of whom are administrative staff –is responsible for taking care of 682,000hectares (2,633 square miles), roughly13% of the country’s territory.“Ideally, we need to double our staff,”he said.SPENDING on infrastructure will alsobe reduced under the new budget. The budgetof the Public Works and TransportMinistry (MOPT) for next year is expectedto be almost a third smaller than this year.María Lorena López, Vice-Minister ofPublic Works, said the measures will “dramaticallyreduce” MOPT’s ability to repairand maintain the country’s roads. As muchas 60% of the ministry’s equipment willremain idle in 2005 unless the tax plan isapproved, she predicted (TT, Aug. 6).Arturo Navarro, president of theAssociation of Independent Cab Drivers ofHeredia, considers both the cuts and proposedtax plan a “slap in the face” forCosta Ricans.“We’ve been hit hard by high gasprices, the rising cost of (the mandatory)technical inspections (that by law all vehiclesmust undergo once a year, and taxistwice a year) and worsening roads,”Navarro explained.ALTHOUGH no additional policeofficers will be hired, representatives ofthe Public Security Ministry told The TicoTimes the austerity measures will notaffect its ability to enforce the country’slaws.“We’re a privileged ministry,” explainedVanesa Castro, the SecurityMinistry’s top administrative official. “TheFinance Ministry originally asked forsharp cuts. We issued our proposal (toMinister Dent) and ended up in a goodposition.”The Ministry’s new budget calls for a“small” increase in spending, which will beused to buy additional patrol cars and otherurgently needed equipment, Castro said. Shedid not specify how much the increasewould be.“We won’t be able to hire any newpolice officers, but we will have a budgetthat allows us to remain operational andexpand certain services,” she said.UNLESS the tax plan is approved,Dent has warned, salary increases for publicemployees will be severely limited andnot enough to counteract the country’sinflation. This announcement has outragedworkers’ unions, which cite it as one of thereasons they are planning a work stoppagenext Monday (see separate story).“Alberto Dent is a highly confrontationalminister who is threatening the country’ssocial peace,” said Albino Vargas, secretarygeneral of the National Association of Publicand Private Employees (ANEP).According to Vargas, collection ofexisting taxes must be improved beforeany new taxes are created. He alleged thegovernment only collects 54% of what itshould be collecting from sales taxes.“What Dent is doing will result in morepoverty and social upheaval,” Vargas said.Not all groups oppose the cuts.Representatives of the Union of CostaRican Private-Sector Chambers andAssociations (UCCAEP), which representsmore than 40 business associations, saidthey consider the austerity measurespainful but necessary. The group hasrepeatedly stressed the need to approve thetax plan (TT, Aug. 6).

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