Friday, June 2, 2023

Costa Rica closed 2022 with a deficit of 2.5%, the lowest in a decade

Saint Joseph.- Costa Rica closed the year 2022 with a financial deficit of 2.5% of the Gross Domestic Product (GDP), the lowest in the last decade and also achieved a primary surplus of 2.1% of GDP, the first in 13 years, reported Tuesday the Treasury.

“We ended 2022 with very positive results that we had not achieved for more than a decade,” said the Minister of Finance, Nogui Acosta, who said that these results “strengthen the credibility in the management of the country’s fiscal policy and strengthen the path towards the sustainability of public finances”.

Official data indicates that the financial deficit for 2022 stood at 2.5% of GDP after nine years in which the figure exceeded 5% of GDP. In 2021 the deficit was 5%.

The Ministry of Finance stressed that this result was achieved despite the fact that interest payments on the debt meant 4.6% of GDP.

This also results in a primary surplus (revenues minus expenses without interest) of 2.1% of GDP, the first in the last 13 years. In 2021 Costa Rica posted a primary deficit of 0.3%.

Revenues for 2022 are equivalent to 16.6% of GDP, while total expenses reached 19.1% of GDP and non-interest expenses 14.5% of GDP.

Minister Acosta said that the country has managed to “close the gap between primary income and expenditure, achieve a primary surplus greater than the established goal, reduce the financial deficit, reduce the debt two years ahead of schedule, exert a greater spending control through strict compliance with the fiscal rule and meeting the goals in primary balance and debt with the International Monetary Fund (IMF)”.

The Government of Costa Rica has maintained an agreement with the IMF since 2021 to access financing of US$1.775 million in exchange for structural and legislative reforms that allow the country to lower the deficit and debt.

Since 2018, Costa Rica has implemented a tax reform that established the value added tax and a fiscal rule to contain spending, among other provisions.

Official numbers indicate that Costa Rica closed 2022 with a debt of 63.8% of GDP, which represents a decrease compared to 2021 when it was 68% of GDP.

The Ministry of Finance indicated in a statement that despite the good fiscal results of 2022 “structural challenges persist in public finances, such as the current level of debt and interest rates that exceed 60% and 4% of GDP, respectively, as well as important debt maturities, in colones and dollars, that will be held in the coming years”.


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