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Wasteful Spending: Costa Rica Hires Too Many Consultants

Article Summary:

Costa Rica spent $2 billion in consulting and contracting services in the last four years, with the Institutes of Electricity and Social Security Fund using them frequently. For now, there is little that can be done to slow down the spending, as these public agencies have the reputation of spending at will.

Photo Credit: Estrategia y Negocios

Original Article Text From Estrategia y Negocios via Google Translate :

Government Of Costa Rica Spends Millions In Consulting

The state spent $ 2 billion in consulting and contracting services in the last four years. This represents more than the total which would be collected with the new tax reform.

This megacifra has been used to pay lawyers, engineers, computer technicians, even though every public institution has a department specializing in these areas.

The Costa Rican Institute of Electricity and the Social Security Fund are entities devoted more resources to pay consultants.

For now, this problem has no way of slowing down, as are those public agencies which spend at will.

In the Comptroller only approve and review the budgets of these institutions.
Moreover, as some have their legal framework, the government can not define your expenses.

When analyzing the numbers of consultants and purchase of services, shows that in 2011, was allocated over U.S. $ 722 million to these items, the equivalent of nearly half of the fiscal deficit last year.

It’s more money than the government aims to raise the tax reform, which would be around 1.5% of production.

It was last year the highest growth in government spending on consultancies, reaching almost 60% compared with 2010.

“I think the only way to stop this is through cost reduction guidelines to decentralized institutions,” said Rep. Luis Fishman.

The central government also had its contribution in the waste, as it paid nearly $ 60 million in services to third parties during 2011.

Ironically, this was despite a directive issued contain public spending, the year before, by the administration of Laura Chinchilla.

The output proposal to stop the waste of resources is that the Ministry of Finance has interference in expenditure control and the surpluses of the devolved institutions.

“We must strengthen the unitary state, enhancing the supervisory powers of the government spending”, Fernando Herrero proposed, Minister of Finance.
At the end are the taxpayers who end up paying this state waste through increased government borrowing.

This has aggravated the existing problem of fiscal deficit, which this year will be around U.S. $ 2.2 billion.

This waste of public resources coincided with the increase in state payroll, 46 thousand people which triggered the payment of wages by 80% in the last four years.

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From Estrategia y Negocios

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