Finance ministry says the fat national debt continues to grow

A good salary in Costa Rica could be $40,000 a year.  But suppose the individual receiving that salary added up mortgages, credit card debt and other mandatory payments to find the amount owed was $16,880.

That would be 42.2 percent of the annual income and definitely a time for belt tightening and a close look at outgo.

Probably a bad approach would be to see the boss and demand a raise because of the loose spending habits. The boss might just say “Clean out your desk.”

This is the same condition Costa Rica finds itself. The Ministerio de Hacienda said Friday that the country owes 42.2 percent of the gross domestic product, the total of goods and services.

The country has gone from a deficit of 25 percent in 2007 to what is expected to be a deficit of 46 percent at the end of this year, according to the ministry.

The percentage of debt is greater than the average debt of other Latin countries, and Chile, for example, has a national debt less than 20 percent. The Latin average is 35.9 percent.

The ministry figures come from the U.N. Economic Commission for Latin America and the Caribbean.

The figures show that Costa Rica’s national debt increased 71 percent since 2008.

Helio Fallas, the minister of Hacienda, said that 2016 has given officials a time to make reforms. He noted that the international price of petroleum was low as were raw materials that had to be imported. In addition, he noted, there was prudent administration of the dollar exchange rate, interest rates were low and there is the expectation that the economic growth would be better than other countries in the region.

Of corse,what he called a prudent administration of the exchange rate is the effort by the Banco Central to keep the dollar form soaring against the colon. In effect, this represented an indirect tax against those receiving dollars who have to pay their expenses in colons, such as  tourism iand exporters.

Fallas, who also is vice president, said that by 2019 he and his staff estimated that the national deficit will reach 58 percent. He said efforts then to levy taxes to counter the increase would take about 5 or 6 percent of the gross domestic product, an amount that would affect the entire population including those who are most vulnerable.

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