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Caribbean & Central America - June 2020

REGION: Fiscal pressures intensify due to coronavirus pandemic

The coronavirus (Covid-19) pandemic has elicited a range of responses among Central American nations but increased fiscal pressures due to the health emergency is one thing that many have in common. Two countries facing such pressures but for different reasons are Costa Rica and Guatemala. In Costa Rica, the fiscal concerns were already rife amid a rising fiscal deficit due to high government spending. Meanwhile international credit ratings agency Fitch Ratings and local think-tank Central American institute of fiscal studies (Icefi) have warned of Guatemala’s “fiscal vulnerability” due to low tax take - a perennial weak point.

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