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Weekly Report - 23 July 2020 (WR-20-29)

COSTA RICA: Alvarado announces ‘historic’ spending cut

President Carlos Alvarado recently unveiled what he described as the largest “public spending cut” in Costa Rica’s history in response to the impact of the coronavirus (Covid-19) pandemic which he said was likely to result in a drop in fiscal income of C$1.2trn (US$2bn), or 3.3% of GDP. With the Partido Acción Ciudadana (PAC) government unable to reopen the economy fully due to the continued surge in new infections, Alvarado’s announcement came days after the finance minister, Elián Villegas, presented a stark reminder of the fiscal pressures on the government: Villegas warned that the fiscal deficit was expected to reach 9.7% of GDP this year, up from 6.96% in 2019, which was already the worst in three decades.

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