After recognizing the serious liquidity problems, last week the government of Luis Guillermo Solis has announced it will borrow another US$1 billion dollars for a hearty lunch that others government will pay for tomorrow.
This week, in its attempt to cut spending (not costs), Solis ordered ministers to suspend all tender processes for vehicles, equipment, and supplies, rental of buildings and consultancies that have not yet been executed.
In the case of contract processes that are already underway, it will be up to head of each Ministry to decide whether to suspend them or consider them indispensable for the operation of the Ministry.
“…According to the presidential order, any purchase process that has not started must be suspended, regardless of whether it is a direct contract or abbreviated public or international tender,” reports La Nacion.
“… The order does not include contracts that are financed by international loans. Such is the case of schools and colleges that will be built with a loan from the Inter-American Development Bank (IDB) or the extension of the Limonal-Cañas section of the Interamerican Norte (ruta 1).”
The measure will take effect once it has been published in the official government newsletter, La Gaceta, scheduled for next week.
In a television address to the nation on the evening of August 1, Solis announced that the government “… faces liquidity difficulties in paying its obligations and guaranteeing the operation of essential services.”
In his announcement, the President said among the measures his government plans to take in the short term, in addition to insisting that the Legislative Assembly approve the reforms to sales and income taxes, by way of decrees, put the brakes on budgetary modifications that represent an increase in expenses; Put a stop on the purchase and rental of properties for the Government with public resources, except for those buildings destined for infrastructure works; A moratorium not to issue new declarations of public interest that represent tax exemptions; and, Repeal of the Law to Decrease the Entry of Capital, in order to promote the entrance of investments to the country.