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Costa Rica: Highest Deficit in Latin America

Article Summary:

2011 marks the second consecutive year that Costa Rica has the highest fiscal deficit in Latin America. The IMF projected that the deficit (excess of expenses over revenues, mainly taxes) represent 5.6% of production.This is the most disturbing result for the economy in 2011, according to several economists.

Original Article Text From Nacion via Google Translate :

Country Culminate Year with the Highest Fiscal Deficits in Latin America

Costa Rica completed a second consecutive year with the largest deficit in the Central Government of Latin America and the Dominican Republic.

This follows from the projections the International Monetary Fund (IMF) for 18 countries.The IMF projected that the deficit (excess of expenses over revenues, mainly taxes) represent 5.6% of production. The estimate of the finance minister, Fernando Herrero, is to be about 5% of production. This is the most disturbing result that leaves the economy in 2011, according to several economists.

The year was also characterized by moderate growth in production.
It will be the third consecutive year in which the country can maintain low and stable inflation, which is among the nations with the lowest indicator in the region.

Clearance will be exhausted.
Program Coordinator for the State of the Nation, Miguel Gutierrez, this year the country spent part of the margin that has to deal with the fiscal problem. “Not much time to provide substantive tax solutions, before some slack in terms of indebtedness is completed exhausted. Without these solutions, we have to choose how they will increase poverty and neglect of public investment, whether by way of cuts and investment programs to combat poverty, or by means of a cost-induced inflation without funding, “said Gutierrez.

Central Bank President Rodrigo Bolaños said that this year the deficit did not push interest rates because the demand for private sector credit was low. But he warned: “A Treasury and is struggling to maintain the level of rates.” For the Central Bank president and former minister of Finance, Francisco de Paula Gutiérrez, this year was a transition year as still comes out of a crisis.

It was also a year of “consolidating the positive aspects that were achieved as in the case of inflation, moderate growth, but in a world that grows little, is a satisfactory growth, but with vulnerabilities that we face. This year we were able to tolerate, but we can not tolerate to future’m thinking primarily on fiscal issues, “he said.

External deficit.
Another concern deficit, but to a lesser extent, the current account deficit, which will also end this year about 5% of production, 9% lower than the country had in 2008, which was the most top of the last decade. This deficit arises from the excess of imports of goods and services over exports.

So far, the deficit has been financed by foreign direct investment (for example, foreign firms that are installed in the country, local purchases or reinvested), which is considered healthy. However, the State Coordinator’s Office said the country should not spend these resources in this way.

Link to Original Article:

From Nacion

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