Costa Rica Closes 2013 with an Increased Fiscal Deficit

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    The Costa Rica News (TCRN) – The fiscal deficit of Costa Rica continued to rise during 2013 and in November reached 4.6% of gross domestic product (GDP), in a year marked by economic slowdown and increased inequality.

    Down from 5.1% last year, Costa Rica’s economy has managed to improve poverty and unemployment, according to official figures, but the fiscal deficit remains a major alarm for the Central American country.

    The latest data from the Ministry of Finance indicates that in the absence of the December stats, the fiscal deficit stands at 4.6% of GDP, which is already above 4.4% throughout 2013.

    The latest forecast from the Central Bank notes that the 2013 deficit will be 5.1% and strong measures are not taken, next year will rise to 6.3%.

    The tax issue has been part of the discussions among the presidential candidates in the elections for next February 2.

    Johnny Araya, the ruling National Liberation Party, José María Villalta, the leftist Broad Front, and Luis Guillermo Solis of the Citizen Action Party (center-left) have agreed that tax reform is needed to increase revenues, but also to strengthen tools for more effective tax collection.

    According to a report by the Central American Institute for Fiscal Studies (ICEFI), Costa Rica’s debt in 2011 reached around 32% of GDP in 2012 rose to 36% and it is expected that in 2013 it will reach 39%.

    The economic slowdown this year has been present in all sectors, except for private construction rose 6.9%, about 0.5 points higher than the same period last year.

    Two sectors that declined was agriculture which is down 0.1% and public construction fell 6.7%.

    Tourism, one of the main economic activities of the country, recorded a 2.7% growth in visitor arrivals to the country in the first half, and the number is expected to reach 2.2 million tourists by the end of year.

    Exports have stagnated and have hardly grown at a rate of 0.4% between January and last November, which has been attributed by the authorities to slow economic growth in major trading partners like the European Union and the United States .

    Poverty stood at 20.7% of households in the country, similar to 20.6% last year, while unemployment has fluctuated between 8.6% and 10% in quarterly measurements made by the State Institute National Statistics and Census..

    One of the most positive yearly data points is the closed inflation between 3.8% and 4.1%, which would be the second lowest in the past four decades. (EFE)

    The Costa Rica News (TCRN)

    San Jose Costa Rica

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