Caribbean & Central America - May 2017 (ISSN 1741-4458)

President Luis Guillermo Solís delivered an upbeat assessment of his government’s achievements in his penultimate state-of-the-nation address to the legislative assembly on 3 May. He focused on advances in reducing poverty, especially indigence, and the reactivation of the economy as foremost among these. Solís was forced to acknowledge, however, that his government had not been able to push through a crucial fiscal reform as it had hoped.

President Solís said that his government had lifted 10,440 households out of poverty (and 9,700 out of extreme poverty) last year, and that the 20.5% poverty rate for 2016 was the lowest for seven years. Solís said that the economy had grown by 3.7% in 2015 and 4.1% in 2016; that exports of goods increased by 7.5% in 2016 on the previous year, and services 12%; and that foreign investment stood at US$2.76bn, up 9% on 2015.

Solís also maintained that the fiscal deficit had come down, from 5.4% of GDP in 2013 to 5.2% in 2016 thanks to “austere government”, but that “the current levels of indebtedness are strongly pressuring public finances and compromising medium-term development…” This was a clear swipe at the political opposition in the 57-seat legislative assembly which continues to condition support for a fiscal reform on the Solís administration cutting wasteful spending and has repeatedly thwarted the efforts of his minority ruling Partido Acción Ciudadana (PAC) to advance a tax bill.