The International Monetary Fund (IMF) concluded that the fiscal deficit will increase at the end of the year due to a series of judicial decisions that will make the Government’s efforts insufficient.
The entity presented the report at the Central Bank of Costa Rica, where it described the increase of the economy (4%) and inflation (0.77%) as positive. However, it noted that the deficit remains high and action are needed.
Lorenzo Figliuoli, IMF Chief of Mission, said that tax reform and the public employment law are essential to provide a better balance to national finances.
According to Figliuoli, the administration must improve the collection of taxes as well reduce public expenditure in the long term.
Currently, the public debt reached 45% of the Gross Domestic Product (GDP) and it is expected that by 2022 the debt will exceed 66% of GDP. The recommendation of the IMF is not to exceed 50%.
The failures to which the delegation of the entity refers are related to education and social spending. For example, compliance with turning 8% of GDP to national education, which was ordered by the Constitutional Chamber in September.
Likewise, the increase in the budget for the National Patronage of Children (PANI) was not allocated.
It is estimated that both items imply about 415 billion colones.
The authorities criticized the inflexibility in the subject of spending, since many expenses are established by law.
On the other hand, the IMF expects a decline in the economic growth that occurred in 2016.
Finally, Figliuoli pointed out that the 2018 presidential candidates should demand that the tax reform be carried out before the start of the next presidential term, as the situation gets worse every year.
The IMF expects the national deficit to reach 6.1% by the end of 2017. In 2016 it was 5.2%.