Chance of Rain
Weather for San José:
High 31° / Low 18°
Chance of Rain
Click here for six-day forecast for 16 communities across Costa Rica!
CLICK HERE TO
SIGN UP FOR OUR FREE DAILY NEWSLETTER
BUY
541.00
SELL
553.00
BUY
584.60
SELL
614.60
BUY
406.18
SELL
430.18
Banco BAC
Banco BCR
Banco Nacional
Banco Popular
Banco Scotiabank

President Laura Chinchilla Announces Initiative to Control Deficit

Share this article

President Laura Chinchilla does not want to cut scholarships

Now that the Fiscal Reform Plan is dead in the water due to a high court ruling, President Laura Chinchilla took to the airwaves last night and delivered a speech that outlined a new initiative to collect resources needed to shore up the deficit, which has prompted the government into borrowing 45 percent of the cash needed to meet its obligations.

The President began her address with a reminder that previous administrations have postponed a solution to the growing deficit. She then reminded the people of Costa Rica of the social programs included as part of the government’s obligations: scholarships, school lunches, child care for working families, public safety, and more.

The high cost of borrowing money in Costa Rica was also mentioned by our President, something that affects borrowers and consumers alike, but should bring a smile to savvy institutional investors, bond traders, and even those who invest in modest instruments such as certificates of deposit. As of today, the benchmark passive rate of interest in our country is 9.5 percent. Compare that to the current 3.25 prime rate set by the Federal Open Market Committee in the United States, and you get an idea of how expensive it is to borrow money in Costa Rica -and how profitable it can be to lend.

In her address, President Laura Chinchilla reminded farmers, entrepreneurs, mortgage borrowers, and even car shoppers that the deficit is the reason they are paying high interests on their loans. She then went on to enumerate what her administration has done to cut down on expenses: salary freezes, hiring freezes, and a reduction of government appointments by 1,000. She then recalled the aims of the failed Fiscal Reform Plan.

According to the Presidential address, the alternative of not paying 60 percent of interest owed in public debt is not a good option. Neither would be the firing of 24,000 government employees or a 55 percent cut on pensions. Instead, our President announced the following four steps to reduce the deficit:

  1. Creating a new method of electronic sales slip to enforce collection of sales and Value-Added Taxes (IVA).
  2. Eliminating tax exemptions.
  3. Selling real estate held by the government.
  4. Creating a new legislative proposal that will include the following measures:
  • Freezing government salaries and high pensions
  • Freezing the budgets of the executive boards of certain institutions
  • Reducing the amount of financing extended to political parties during elections
  • Authorizing the transfer of institutional budget surpluses to the government
  • Authorizing public institutions to charge for non-essential services they provide

The President reminded the public that the steps outlined above would only amount to 0.8 percent of the Gross Domestic Product, whereas the failed Fiscal Reform Plan aimed to collect 1.5 percent. This means that under the new measures the deficit will be contained, rather than reduced.

Source: Presidencia de Costa Rica

Print Friendly

Related Articles

Pizza, Yuca, Cocaine, and Costa Rica: Father and Son Found Guilty

This afternoon, following a two week trial, a federal jury in Brooklyn, New York, returned a guilty [...]

Recent Costa Rica Volcano Eruption Could Form New Caldera (VIDEO)

A powerful mid-afternoon eruption of the Turrialba volcano, currently the most active in Costa Rica, [...]

Regl Sea Commerce Expands with Ferry Between CR and El Salvador

By Wendy Anders The Central American business magazine, Revista Mercados y Tendencias, reported July 19 [...]

U.S. College Students Learn About Biodiversity in Costa Rica

In the wee hours of May 22, 13 Eastern biology students and biology professors Patricia Szczys and [...]

Scientists Explain Why Sloths Are So Slothful in Costa Rica

Although most of the terrestrial world is covered in trees, there are precious few vertebrates that make [...]

Another U.S. Tourist Infected With Zika Virus in Costa Rica

Bismarck, N.D.— The North Dakota Department of Health (NDDoH) has confirmed a second case of Zika virus [...]

Corporate Univ Founded by Catholic Apostolic Attracts US Company

By Wendy Anders Yesterday Costa Rican Foreign Trade Minster Alexander Mora announced the start of $2.5 [...]

Almost 20K Quit Classes After School Break: Officials Concerned

By Wendy Anders Every year public school administrators in Costa Rica face a troubling school drop-out [...]