The World Bank, one of the main creditors of the country, described as “positive” the measures of containment of public spending announced on Wednesday by the Minister of Finance, Rocío Aguilar.
The level of the deficit between 2010 and 2016 was on average 5.2% of the Gross Domestic Product (GDP); and in 2017 it reached an even more worrying level with 6.2%, the highest since the crisis of 1980. These fiscal imbalances caused an explosive growth of public debt, which went from less than 25% of GDP in 2008 to almost 50% in 2017.
The biggest challenges facing Costa Rica today are to reduce the fiscal deficit and stabilize the public debt, since they are a threat to the principles that govern their social pact,”
said the representative for Costa Rica, Fabrizio Zarcone.
According to the international body, the persistent deficits and high levels of indebtedness risk the achievements of recent decades, such as low inflation, poverty reduction, and the generation of inclusive growth. In the long term, lower fiscal deficits and lower debt burdens would help consolidate these gains and boost growth.
It is appropriate to adopt measures that reduce the fiscal deficit and put the public debt back on a sustainable path. The adjustment that Costa Rica needs is 4.5% of GDP to stabilize the public debt ratio at its current level; and although the measures announced by Minister Aguilar are not sufficient to reduce the fiscal deficit in this magnitude, they are necessary to begin a consolidation path,”
said the entity in a statement.
It would also be relevant the approval by the Legislative Power, of the project of Law for the Strengthening of Public Finances, as well as the other projects referred to by the Treasury hierarch before the legislators. The World Bank urged the early approval of the draft laws and assured that it will continue its collaboration with the government.