Costa Rican fiscal deficit widens during first half of year

July 16, 2010

 

The Finance Ministry announced that government spending ballooned 26.5 percent in the first half of 2010 in comparison with the same period in 2009. Government revenues increased only 13.7 percent during the same time frame.
 
According to the Finance Ministry, much of the increase in spending was attributed to the payment of government salaries, which rose 23.3 percent, and personnel expenditures, which went up 36.2 percent. The ministry also reported that university expenses increased 29 percent, interest payments were up 12.7 percent and that internal debt jumped 24.2 percent.
 
On the revenue side of the ledger, increases in taxes generated the largest sums of government income, including income generated by income taxes, which increased 9.2 percent, from sales taxes, which rose up 24.3 percent and from the customs tax, which shot up 30.5 percent. Income from utility taxes also grew 4.5 percent during the first six months of the year.
 
“We have to be very cautious about being pleased with the increase in the collection of taxes,” said Fernando Herrero, the finance minister. “While the areas of income grew in small amounts, particularly in the case of internal taxes, the weak economic recovery does not allow us to forecast important growths in government income. We are at a time when our focus needs to be on improving the management of public finances.”
 
The Finance Ministry predicted the growth of the fiscal deficit for 2010. The deficit, which is currently over $402 billion, currently represents 2.18 percent of the gross domestic product (GDP). Herrero has said he expects the deficit to account for 4.5-4.8 percent of the GDP by the end of the year (TT, May 28). 
 
As far as plans to limit the expanding deficit, Herrero said the ministry will continue to combat fraud and tax evasion, and look for new avenues to generate income, potentially by exploring the option of a tax reform.
 
“In the next few weeks,” Herrero said, “we will present a proposal to the country to introduce some reforms to the tax system that will allow us to improve the equity of the system while working to generate more income and reduce the system’s complexity.”
Facebook Comments

You may be interested

A washing machine ocean and a city of sin at the Essential Costa Rica Surf Pro 2018 in Jacó
sports
1010 views
sports
1010 views

A washing machine ocean and a city of sin at the Essential Costa Rica Surf Pro 2018 in Jacó

Manuel Martínez - October 14, 2018

One of the things I like most about surfing is the constant change. You’ll be surfing the best waves of…

A look back at our 5 questions for Costa Rican photographer Ivannia Alvarado
Weekend Arts Spotlight
724 views
Weekend Arts Spotlight
724 views

A look back at our 5 questions for Costa Rican photographer Ivannia Alvarado

Elizabeth Lang - October 14, 2018

Our Weekend Arts Spotlight feature has profiled a lot of artists and gone through several changes throughout the years. One…

Heavy rains hit Costa Rica: two dead, one missing; another tropical wave expected to hit tomorrow, red alerts issued
News
13703 views
News
13703 views

Heavy rains hit Costa Rica: two dead, one missing; another tropical wave expected to hit tomorrow, red alerts issued

Alexander Villegas - October 13, 2018

Two people died and one is missing after a tropical wave and heavy rains swept through Costa Rica late this…