The regular budget for 2019 would imply a minimum increase of around 10% compared to this year’s, warned Rocío Aguilar, Minister of Finance. The hierarch explained that the increase is due to the gap in the 2018 budget, which is now being covered with extraordinary budgets.
Given that during 2018 about ₡ 800 billion in maturities were not considered, comparing this year with 2019 will show a lower base. The budget for 2018, if that premise of swaps had not been considered, should have grown approximately 13% and the budget came here with an increase of 4.5%, so it’s possible we see that difference of 10 points with the change of the year,” explained the Minister.
Aguilar argued that this possible 10% difference will not mean an increase in the debt balance but rather in the debt service.
In the first year of the Solís Rivera administration, they requested a budget with an increase of 19% compared to 2013, that is, an additional 940 billion to face the finances of 2015.
Regarding the proposal presented that year, to face 2016, the Treasury chose to increase the budget by 0.54%.
On September 1st, 2016, the then Minister of Finance, Helio Fallas submitted an application for an increase of 12% for the following year. Those percentages were very far from the 3.2% increase budgeted in 2017 for this year. That’s the hole in the budget, described as a crater by Eduardo Cruickshank from National Restoration.
This decrease in the increase that had been presented by the government could be a political calculation according to some legislators, who pointed out that the government of Solís would have chosen this way to avoid criticism during the political campaign ahead of the presidential elections of 2018.
Leaving aside the political and social issues, economists agree on the urgency of making cuts in some areas, to avoid growth in the double-digit budget. Therefore, although it is inevitable not to budget funds for debt maturities, the government should concentrate on reducing other items.
According to economist Melvin Garita, debt payments should be a priority, to avoid a bigger setback in public finances, and even complete paralysis, because if the government stops paying that amortization, the doors are closed to obtain funds.
The economist Luis Loría feels the same, in terms of the urgency of cuts, to avoid a minimum increase of 10% in the budget. Loría went further by considering a 0% increase for all plans for the fiscal year during the four years of the Alvarado Quesada administration.
The only way to correct it or put a brake on it, is to cut deep spending and process the reforms, large and pending, that have to do with public employment and pensions and state reform and with cuts in transfers to different groups,”
said the economist.
Loría believes no more taxes should be approved, because if it is done, the necessary decisions will never be taken to achieve an ordering of finances in terms of spending, so that, in a few years, the money shortage will be the same and the government in turn will be forced to ask for new taxes.