Published Tuesday, January 12, 2021
Government plans to increase income and reduce
expenses to obtain a $1.7 billion loan with IMF
By the A.M. Costa Rica staff
This Monday the government presented the plan to reach an agreement with the International Monetary Fund, 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 a 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 provide 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.
According to the ministry, many of the government's plans are the result of conversations with organization leaders, chambers of commerce and political leaders.
Those meetings were held last year, as a condition to stop blockades by many organizations that protested against the IMF loan.
In Oct. 2020, the protests marched against the government's plan to increase taxes as part of an agreement with the IMF.
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