The government asserts that the debt level is so high, that for every 100 colones allocated to expenditures, 46 must be financed with new loans.
According to Jose Francisco Pacheco, Costa Rica’s finance minister:
[quote_center]”We can’t put off the obligations and mortgage the future of the country, your future and that of your children.”[/quote_center]
Pacheco asserts that taxes are low in Costa Rica, compared to the rest of Latin America and Europe. According to government officials, the country has the same level of public service found in developed countries, but with a tax infrastructure inferior to that found in even other Latin American countries.
via tradingeconomics.com
To combat the increasing national debt, a new proposal is being considered that combines three items: structural reform of expenses (such as the pension fund), providing more enforcement to the Treasury to collect outstanding taxes and the transformation of the current sales tax structure to a value-added tax, as well as an income tax.
[quote_center]“If we don’t do something today, in only 5 years the national debt will reach 65% of national production.”[/quote_center]
The government only has 2 options: cut costs or increase its revenue. “If we reduce costs we will have to eliminate services that the community requires,” says Pacheco.