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Economy & Business - April 2012 (ISSN 1741-7430)

COSTA RICA: Scrambling for alternative fiscal measures

Costa Rica is the only country in the region that has not implemented a fiscal reform in recent years. That was the conclusion of the 'Lente Fiscal Centroamericano' report compiled by a local think-tank, Instituto Centroamericano de Estudios Fiscales (Icefi), which analysed the Central American response to the 2008-2009 global economic crisis. Costa Rica’s fiscal deficit came in at 4.4% of GDP in 2011 and is projected to rise to 6.7% in 2012. The policy alternatives at President Laura Chinchilla’s disposal shrank dramatically in April when the constitutional (IV) chamber of the supreme court ruled that a fiscal reform proposal sent down by the executive to the national assembly (AL) was “unconstitutional”. After 18 months, the government will have to return to the drawing board; in the meantime, President Chinchilla has announced a series of piece meal measures intended to arrest the soaring deficit.

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