Caribbean & Central America - October 2013 (ISSN 1741-4458)

Another voter complaint is Costa Rica’s widening fiscal deficit. In recent weeks, organisations ranging from the international credit ratings agency, Moody’s, the World Trade Organisation (WTO) and the Central American Institute of Fiscal Studies (Icefi) have raised concerns about the deficit. On 23 September Moody’s announced it was lowering its outlook on Costa Rica’s Baa3 bond rating from stable to negative, citing “a continued increase in the main debt metrics since 2009”, as well as “the country’s difficulty in passing legislation to reduce high fiscal deficits and limit the increase in the debt burden”. Moody’s highlighted a “jump in the fiscal deficit” from an average of 1% of GDP between 2004 and 2008, to 4.4% of GDP for the 2009-2013 period. This followed an Icefi report which noted that Costa Rica’s public debt jumped from 30.7% to 35.3% of GDP between 2011 and 2012 – the fastest rate among Central American economies. An August report by the WTO noted that Costa Rican authorities “recognise that the current fiscal imbalance is unsustainable in the long term unless appropriate steps are taken”.

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