Government Deficit Continues Despite Increase Tax Enforcement

Despite increased tax collection, the central government deficit ended the first semester of the year at ¢ 486,000 million, representing 2.2% of domestic production, as the result of the first half of 2011.

The deficit arises from excess of expenses over income and the difference is covered by borrowing. If this credit is available within the country can put pressure on interest rates in colones.

According to information provided yesterday by the Ministry of Finance, revenues are growing at a rate almost equal to expenditures.

If we exclude inflation, total revenue, mainly from taxes, in the first half increased by 6.5% over the same period last year, and total expenditures by 6%.

The revenue growth is similar to that experienced by the production, however, to the Finance Minister Edgar Ayales, these do not grow just for economic improvement, but also for the efforts against tax evasion.

His argument is that not all sectors that are growing pay taxes.

Ayales he added that, despite the efforts to contain costs, this remains an important growth and prevents improving the outcome of the Government.

Finance Minister maintains the deficit estimate for all this year in an amount equal to 4.5% of production, however, clarified that there could be a change in the revision of the macroeconomic program will announce the Central Bank at the end this month.

Fernando Rodriguez, a researcher at the Program for Fiscal Studies National University, said the center has an estimated deficit of 5% of production for this year.

According to the minister, the main concern is the financing of a deficit because everything is being done with internal loans.

He explained that in the first semesters required ¢ 625,000 million in loans and the second are going to need ¢ 900,000 million, for early next year, must pay $350 million in debt.

Also emphasized that it is very important the approval of the bill of Eurobonds which allows the country to borrow externally even in $ 1,000 million per year.