The central bank calculates the Imae every couple of months. The January figure showed annual growth of 0.6%, while the March figure (published in May) showed growth of 0.4%.
Economists point out that the Imae figure strips out the effect of exports (which is included in GDP). The government has set a 3% growth target for this year. There are widespread fears that the government will not hit this target.
Industrialists say that they are scaling back their production. Anastasio Somarriba, the president of the Consejo Superior de la Empresa Privada, admitted that output had fallen, but he said that, rather than a local problem, this was due more to the grisly world economic situation . He said that at a meeting with the president of the central bank, Mario Alonso, the latter had said that he expected growth this year to be between 1% and 2%. The bank has said that the industries which are doing reasonably well are stockraising, financial services and construction.
Tax reform: Critics of the government's tax reform, passed last year at the instigation of the IMF, claim that it is having perverse effects. The reform, the third so far in the current government of President Enrique Bolaños, is designed to raise 1.7% of GDP (600m córdobas). The package is part of the IMF-induced effort to get the fiscal deficit down from 12% of GDP to between 5% and 6%. The critics point out that the government is at odds over whether the 15% VAT rates effectively introduced on basic products should also be paid on imports.
The first fruits of the reform have been an increase in the price of basic foods. This is because the government has ended subsidies, on items such as electricity, for industry. Now these companies have to pay VAT of 15% for the electricity they use. Businesses have passed this increase on to consumers.
All the grain processing industries, which previously were free of VAT, now have to pay it on their inputs, though they do not levy it on their outputs. Business are also struggling with the bank deposit tax, which is levied on balances of over US$5,000 or equivalent. The taxman swipes 10% of the interest generated on these deposits. There is also a 1% asset tax on top of the 30% corporate income tax. Industrialists grumble that it is unfair that they have to pay this tax in full, while banks only have to pay 0.6%.
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