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For a Better Costa Rica

Updated on February 25, 2015

The proposals that the Costa Rican government has put on the table in tax matters are not a real and ultimate solution to ensure the sustainability of public finances in Costa Rica.
Therefore, what the government wants to implement, with the new tax package is just a disguise or a platform to further promote public spending, which causes havoc in terms of fiscal deficit and public debt. It is clear that prevailing deep rooted ills are getting worse.

The Government does wrong by not taking the right decisions to pursue a responsible fiscal management in the medium and long term. Our system needs a major injection, in order to cut significantly current expenditure in the short term. To stop them or not letting them grow more than necessary, as proposed by the Government, is not even near a solution. Again, we would be choosing to postpone the necessary adjustment and pass the bill, which is becoming larger and will be detrimental to the people in the future, as time passes.

Nor can we continue to ignore the fact that during the past three years, the budgets submitted by the Government for approval in the Legislative Assembly are illegal because they violate Article 6 of the RepublicĀ“s Financial Administration and Public Budgets Law in force, which prohibits financing of current expenditures with public debt, as it has been pointed out repeatedly by the Office of the Comptroller General of the Republic.

Again, to meet what is required by law, we need to cut current spending, rather than allow it to continue growing at a slower pace. If this situation is not corrected, everything indicates that the budget to be submitted by the Government for 2013 would also be illegal.

The road to fiscal responsibility should include the approval of a draft bill for Fiscal Responsibility for Treasury Matters. This draft bill establishes limits on the increase of public expenditure, to the ratio of total debt over GDP and a primary surplus requirement. At the same time, the law would force the government to submit plans to reduce public debt and deficit, which would be binding, until the achievement of defined fiscal goals.

The lack of decision is the only true obstacle. The experience in several countries in reducing unnecessary government spending and the adoption of strict fiscal rules show that it is feasible to take steps to help ensure responsible and sustainable management of public finances.

In Costa Rica, it is not that public spending cannot be cut, this can be done. The problem is that those who govern us do not dare to try; in addition, we have some Deputies who are only interested in pleasing their party and serve themselves and do not care about the welfare of their country nor for doing their job better every day.


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