Costa Rican Government Will Push For Austerity Measures In 2021 To Contain Deficit
- Costa Rica is expected to run historic deficits of 9.5% of GDP in 2020 and 8.6% in 2021 as the Covid-19 pandemic causes a significant decline in public intakes.
- President Carlos Alvarado’s ongoing commitment to fiscal austerity will restrict countercyclical government spending in the coming quarters, which will likely slow the country’s economic recovery and limit revenue growth in the medium term.
- Additionally, public debt is projected to reach 76.0% of GDP in 2020 and 78.2% in 2021, which underpins the expectation that the government will pursue structural reforms despite the public backlash to consolidation measures.
(Source: Fitch Solutions)