The Ministry of Finance (Ministerio de Hacienda) has a deep commitment to the well-being of families, companies and institutions in the country. Although the pandemic is impacting public revenue and spending, it said it has developed income and expenditure policies that ensure that the primary deficit is not greater than -3.4% of GDP and a fiscal deficit is not greater than -8.6%.
The crisis caused by the Covid-19 outbreak is causing a negative effect on the public health of the countries. This requires putting in place measures to prevent massive contagion. Unfortunately, the necessary sanitary measures directly harm the economy and people’s jobs.
Before the pandemic, Costa Rica’s public finances were improving. During the first quarter of 2020, the Ministry of Finance registered the lowest primary deficit in a decade (0.12% of Gross Domestic Product -GDP-), a reduction in current spending without interest (0.27% of GDP) and a significant increase in tax collection (0.33% of GDP).
Had this trend continued, the 2020 primary deficit would have closed at -1.3%, and the fiscal deficit at -6.2% of GDP.
The takeaway from the Ministry’s statement is that will cover all its gross financing needs this year and it will continue working to guarantee that the Government complies with the payment of all the commitments: financing of social programs, payment of the debt, payment of the payroll, payment to suppliers, strengthening of institutions and public investment.
“The financing that we require in the national financial market for the rest of the year is less than we had planned before the crisis, since we do not want to squeeze the private sector, this would allow them to access the resources available in Costa Rica and it will not put pressure on local interest rates,” said the statement.