LatinNews Regional Monitor: Caribbean & Central America - 29 May 2019

* Costa Rica’s central bank (BCCR) has released a statement underlining that the issuance of foreign debt bonds, a proposal currently being considered by the 57-member unicameral national legislature, would contribute to the country’s fiscal consolidation and promote economic reactivation. The statement notes that in its macroeconomic programme for 2019-2020 the BCCR estimates that the issuance of bonds for US$1.5bn in 2019 and the same amount again in 2020 would improve the government’s fiscal situation. On 24 May, the Development Bank of Latin America (CAF) granted a US$500m loan to Costa Rica to support the country’s fiscal sustainability efforts by improving management of the tax system and a greater efficiency of public spending. Back in December 2018 the government led by President Carlos Alvarado pushed through a fiscal reform, due to come into force on 1 July 2019, which, among other things, replaces the current 13% sales tax with a 13% value-added tax (VAT) and increases the number of products and services to be taxed. According to official figures, the country’s fiscal deficit closed at 6% of GDP in 2018, down from the 7.2% forecast.

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