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Costa Rica’s budget deficit hits 15-year low, debt remains a problem

During the first half of 2023, Costa Rica reported a fiscal deficit of 0.9% of its Gross Domestic Product (GDP), marking the best performance for this period in the last 15 years, according to the Ministry of Finance.

This figure represents an improvement from the 1% deficit recorded during the same period of the previous year.

Excluding interest payments on debt, Costa Rica generated a primary surplus of 1.4% of the GDP in the first half, an increase from the 1.3% recorded during the same timeframe in 2022.

The government confirmed that they comfortably met the goal agreed with the International Monetary Fund (IMF) for the first half of 2023.

New Congress building in Costa Rica. (Photo Internet reproduction)
New Congress building in Costa Rica. (Photo Internet reproduction)

The primary balance stood at 341.242 billion colones (approximately $622.7 million), exceeding the IMF-agreed target of 305 billion colones (around $556.6 million).

In exchange for a funding agreement of $1.778 billion, Costa Rica agreed to adhere to a set of economic targets and legal reforms stipulated by the IMF.

Despite the positive fiscal results, the government highlighted that public debt, which represented 2.3% of the GDP in the first half of 2023 (the highest in the last 18 years), remains a significant challenge.

Additionally, official data shows that expenditures grew by 2.9% compared to the first half of 2022, while revenues rose by 4%.

Furthermore, as of June 2023, the public debt stood at 61.1% of the GDP, a decrease from the 63.8% reported during the same period in the previous year.

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