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Weekly Report - 09 February 2017 (WR-17-05)

COSTA RICA: Solís falls short of fiscal reform pledge

President Luis Guillermo Solís was forced to admit last week that his unpopular leftist Partido Acción Ciudadana (PAC) government was abandoning the fiscal reform proposal it introduced in August 2015. This suggests that, as in the case of its predecessors, the PAC administration – hamstrung by its weak legislative presence – will fail to deliver on its electoral pledge of implementing a comprehensive tax reform. The admission, which follows ongoing gridlock in the 57-member legislature, where the PAC has just 13 seats, will fan existing concerns about Costa Rica’s ability to contain its national debt and reduce its fiscal deficit, which reached 5.2% of GDP in 2016 (marginally less than the 5.7% registered in 2015).

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