Finance Minister Presents Positive Final Report

May 5, 2006

Two members of outgoing President Abel Pacheco s economic team presented glowing reports at his final Cabinet meeting Tuesday, citing fiscal control and increasing exports as major achievements of the administration.

Outgoing Finance Minister David Fuentes said that despite the lack of additional funds tax reforms would have provided Pacheco and his ministers urged the Legislative Assembly to approve such reforms for years, but to no avail the ministry managed to bring the deficit to its lowest levels in 11 years by improving tax collection and controlling spending.

The numbers speak for themselves that s a benefit of our profession, he said at the press conference following the meeting, adding that, without any changes in the tax structure, the ministry increased tax collection by 16.5%, 16.7% and 19.6% in 2003, 2004 and 2005, respectively. Efforts to crack down on tax evasion were partially responsible for these improvements, he said.

Total tax income as percentage of the gross domestic product (GDP) increased from 12.86% at the start of the Pacheco administration to 13.62% today.

One tool now in place to help ensure tax collection will continue to improve is the 1,600 newly installed computers in the General Tax Administration. Fuentes said that before, Finance Ministry employees had to bring their old computers in from home to use at work, creating an unacceptable situation.

The administration of incoming President Oscar Arias has plans to reintroduce tax reforms in the new Legislative Assembly, though broken down into smaller bills (see separate story).

Meanwhile, outgoing Trade Minister Manuel González announced that exports increased a record 22% in the first trimester of the year, for a total of $1.97 billion the fastest growth the country has ever reported, he said, and in line with the ministry s export goals of $11 billion per year by 2010 and $16 billion by 2015. Strong performance from the agricultural sector played a major role in this achievement.

According to a statement released April 28 by the Foreign Trade Promotion Office (PROCOMER), exports in the agricultural sector reached $469 million during the first trimester, a 15.2% increase over the same period last year.

The agricultural sector saw a 23.6% growth in banana exports and a 61.7% growth in pineapple exports during the first trimester of this year.

The agricultural product showing the most growth in the first trimester is pineapple, which generated $95.7 million in profits, compared to $59.2 million during the first trimester of last year.

Banana is the main agricultural product exported from Costa Rica, the second largest exporter of the fruit worldwide behind Ecuador, according to the statement.

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