IMF Team Meets with Costa Rican Authorities | WPN World People News

● IMF welcomes authorities' efforts over the last year to increase revenue and contain spending growth

● Fund praises new tax reforms as an important additional step toward fiscal consolidation

● IMF staff encourages prompt political agreement on tax reforms

An International Monetary Fund (IMF) team led by Mr. Alejandro Werner, Director of the Western Hemisphere Department, and Mr. Lorenzo Figliuoli, IMF mission chief for Costa Rica, on February 8 met with Costa Rican authorities in Washington to discuss the country’s economic prospects and fiscal policy. The authorities were represented by Costa Rica’s Vice President, Mr. Helio Fallas; Central Bank Governor, Mr. Olivier Castro; and Costa Rica’s ambassador to the U.S., Mr. Román Macaya.

The discussion focused on reforms to the income tax and the added value tax that the government is currently seeking to promote, with a preliminary estimate of expected revenue of about 1.5 percent of GDP.

At the end of the meeting, Mr. Lorenzo Figliouli made the following statement:

“The IMF appreciates the effort made by the authorities over the last year to increase revenue and contain the growth of spending through administrative measures. These measures have resulted in a reduction in the primary deficit of 0.5 percent of GDP.

“The new tax reforms proposal is an important additional step toward fiscal consolidation. If the preliminary estimates of its yield are confirmed, the fiscal package could, together with the 0.75 percent fiscal consolidation expected from the legislative initiatives taken regarding tax evasion, pensions charged to the budget, transfers to the government’s decentralized entities, and corporate taxes, could generate about two-thirds of the total consolidation needed to achieve a sustainable fiscal position.

“This reform marks a step in the right direction to deal with an international context that is more volatile than expected some months ago and sends a positive signal to the markets. In this context, we urge political parties in the legislative assembly to reach agreement on a fiscal package as quickly as possible so as to avoid exposing Costa Rica to serious risks.”

Source: International Monetary Fund