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Published Thursday, February 11, 2021
Deputies could solve the economic crisis,
according to AmCham
By the A.M. Costa Rica staff
The Costa Rican-American Chamber of Commerce, AmCham, called on the deputies of Congress to approve the bills that guarantee the definitive solution to the fiscal crisis.
According to AmCham, the deputies should be focused on approving key bills that will become new laws to reduce government spending, the reform of the State, the agreement with the International Monetary Fund, IMF, and the Public Employment Law.
The bill to modify the Public Employment law seeks to eliminate a series of so-called privileges and high salaries of public employees.
"Costa Rica is at a turning point for the definition of economic stability and social peace," said the Chamber in its statement. "We have in front of us the opportunity to solve the serious financial situation that the country is going through, but we also face great risks if decisions are not made promptly and in an assertive manner."
According to the Chamber, the negotiation with the IMF is one of the projects that must be resolved urgently. As well the approval of the mentioned key bills, which are in analysis in Congress, the fiscal gap could be closed. "Otherwise, we run the risk that rating agencies and multilateral organizations receive incorrect signals and recommend a deterioration in our country rating," the Chamber said.
"The time has come for the Legislative Assembly to find a solution to the fiscal crisis, which has as its root cause the disproportionate growth of public spending," Gisela Sánchez, president of AmCham said.
AmCham supports the approval of the agreement with the IMF, which could provide confidence to the local and international financial community, so, Costa Rica continues to be an attractive destination for foreign direct investment. "If this scenario changes, the effect on unemployment and loss of economic and social prosperity would be imminent," the Chamber warned.
In January the government presented the plan to reach an agreement with the IMF to obtain a loan of $1.7 billion.
According to the Ministry of Finance, with the loans and adjustments in government expenses and income, the economic stability of the country in the medium and long term can be guaranteed.
To generate income, the government proposes to create more taxes, for example, charge an income tax to the school bonus for public employees. The school bonus is an extra payment for public employees made in January as support to cover the expenses of their children at the beginning of the school year.
The plan also includes canceling or reducing some exemptions, increasing the tax on luxury homes, creating a universal income tax, creating a new tax on lottery prizes, among others.
Plus selling the loan assets portfolio of the National Commission for Education Loans, which provides loans to university or academy students to continue with their careers.
When it comes to reducing public spending, several projects were proposed such as changes in the public employment law (which reduces privileges to public employees), reducing expenses in the purchase of goods and services and reducing the pensions that are paid out of the government budget.
The plan proposes to reduce spending from 16.45% of GDP to 13% in the next five years.
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Should the deputies approve the IMF loan? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com
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