According to data by the Central American Institute For Fiscal Studies, in 2018 the Costa Rica State Administration will cost a 21.6% of the GNP, the highest in the Central American region.

Ten years ago, in 2008, the country reported its last surplus of $52 million but by the end of 2018 the country will be short $3.5 billion.

The situation of the country has deteriorated throughout the years, as reference, in 2014 the cost of the State Administration represented 14% of the GNP.

In Central America, Costa Rica is the worse case with debt at 21.6% of the GNP, as we mentioned before, followed closely by Honduras with 21.5%, Nicaragua 19% and Panama 18.7%.

Even though Costa Rica’s situation is worrisome, it is important to understand that those costs are directly related to the level of services offered by each Nation and that in this case all social indicators in the region put Costa Rica as a leader; for instance, in the human development index Costa Rica is in position 66 in the world, just behind Panama that is in position 60, while Guatemala is in place 125, Honduras ranks 130 , Nicaragua 124 and El Salvador 117.

The Costa Rican Government has been adamant about the need to better the country’s income through fiscal changes, battling tax evasion, cutting expenses or a healthy combination of all.

The taxes in the country are under the average for the region, for Costa Rica it at 13.4% of the GNP while in Honduras is of 17.8% of its GNP, 16.4% in Nicaragua and 16% in El Salvador.

Costa Rica has the most expensive State Administration (Government), a very average tax collection method, and the worst fiscal perspective. Everything points to the fact that the country will close this year with 7.1% of fiscal deficit as estimated by the Central Bank, a much higher number than all other countries in the region.

The reason for the increase in the fiscal deficit could come from disproportionate public expenses, however, in contrast, Costa Rica offers better services than the rest of the countries in Central America. But that dosen’t mean its working.

In other cases, countries have managed to improve their fiscal deficit by cutting their investment in health and education.

Costa Rica now has the challenge of finding a solution to its fiscal deficit that involves all sectors to avoid affecting the quality of services the State provides, and also to avoid affecting Only the private sector, since this would have a direct repercussion over production, employment and consumption.