Businessmen Asking for Strict Control of Public Spending
The Chamber of Commerce, Industries and Agriculture in Panama has reiterated the need for prudent management of public finances and effective control of state spending in order to avoid overspending or an increase in the fiscal deficit.
A press release from the Chamber of Commerce, Industry and Agriculture of Panama (CCIAP) reads:
PRUDENCE, PRIORITIES AND TIGHT CONTROL OF PUBLIC SPENDING
Faced with the presentation of Bill No. 499, which dictates the general government budget for fiscal year 2013, our union is reiterating the need to maintain fiscal discipline, prudent management of public finances and effective control of state spending in order to avoid overspending or an increase in the fiscal deficit.
The strength and diversification of our economy, allows for a continued positive outlook in the projections for the short and medium term to the end of this year, however, the international context is extremely complicated, making it necessary to prioritize caution in management of state assets in order to preserve resources and sustain growth and have a sustainable economy.
The constant increase in Costa Rica's public debt seems unstoppable, which could generate "a sudden change in investor confidence" and force "a messy macroeconomic adjustment".
Even if in the coming months they manage to secure parliamentary approval for tax measures currently requested by the government, public debt will continue to increase and in 2019 will represent over 50% of GDP.
"The defense and strengthening of the rule of law requires, as a starting point, enabling sound public finances. The rest is verbal pyrotechnics." Otton Solis.
Costa Rica is subject to a rare political situation, where the founder of the party in power and his first deputy, defends rationality as a tool of governance and for managing public finances, in the face of voluntarism in the matter on the part of the Executive, which adds more risk to the serious threat of the fiscal deficit inherited from previous governments, presenting a budget that increases state expenditures by 14%.
With an adjustment permitted by law the fiscal deficit of the nonfinancial public sector totaled $1,034,000 at the end of 2015, equivalent to 2% of GDP.
Prensa.com reports that "...The total balance of the year showed a larger deficit of $1.460 billion (2.8% of GDP), but the government turned to a possible mechanism in the law which has to do with the absence of contributions to the Savings Fund of Panama in order to adjust the deficit to 2%, the limit set by the Social Fiscal Responsibility Law for the last year. "
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