LatinNews Regional Monitor: Caribbean & Central America - 22 November 2018

* The Organisation for Economic Co-operation and Development (OECD) has issued a statement noting that Costa Rica’s growth is projected to recover to around 3.25% in 2020. However, the OECD warns that “uncertainty, particularly surrounding the planned fiscal reforms, is weighing on growth in the near term”. According to the OECD statement the “projections are based on the assumption that the fiscal reforms will be implemented from 2019, with modest fiscal tightening holding back growth in 2019 and 2020”. However, it warns that “Costa Rica’s unsustainable fiscal situation needs to be addressed urgently to avoid a further deterioration in investor sentiment”. The government led by President Carlos Alvarado is seeking to push through a fiscal reform initiative that seeks to address the country’s widening fiscal deficit, which closed at 6.2% of GDP in 2017. Approved in a preliminary debate by the 57-member unicameral national legislature last month, the initiative, which has been rejected by the supreme court (CSJ), would replace the current 13% sales tax with a 13% value-added tax (VAT) and increase the number of products and services to be taxed among other things. The latest figures from Costa Rica's finance ministry released on 20 November show the fiscal deficit reached 5.09% of GDP in the first ten months of 2018, up from 4.66% in the same period in 2017.

End of preview - This article contains approximately 226 words.

Subscribers: Log in now to read the full article

Not a Subscriber?

Choose from one of the following options

• Subscribe
• Sign up for a one-time, 14-day trial