Capitales.com analyzed the relation between debt and GDP for each country in Central America. They noted that although Costa Rica, Guatemala and Honduras are within acceptable levels, they are dangerously close to surpassing them.
The relation between debt and GDP is already above the recommended 40% in El Salvador, Nicaragua and Panama. In the latter, however, the situation is less dangerous, given Panama’s good economic performance and optimistic future outlook.
ICEFI, the Central American Institute for Fiscal Studies, noted that “Central American societies must reach fiscal agreements to maintain acceptable debt levels in the short and medium term, while paying attention to expanding social (education, health, housing, etc) and economic spending (roads, bridges, energy generation, etc).
Source: Capitales.com
More on this topic
March 2011
Fitch upgraded Foreign currency IDR to 'BB+' from 'BB'; Country ceiling to 'BBB-' from 'BB+'; Local currency IDR affirmed at 'BB+'; and Short-term IDR affirmed at 'B'. The Rating Outlook is Stable.
From the Fitch Report:
"The upgrade reflects Costa Rica's better than expected economic resilience during the global credit crisis, steadily improving macroeconomic stability underpinned by lower inflation and higher international liquidity as well as the country's relatively modest external indebtedness.
October 2011
Experts agree Alvaro Colom’s successor will face a difficult fiscal, economic and political situation.
First, it will be difficult to achieve the tax reform needed to tackle the decline in tax revenues which is set to continue into 2012. Ricardo Barrientos, Central Institute for Fiscal Studies (ICEFI in Spanish), also said that the losing candidate in the election will become the main opposition, and will complicate any reform attempts or approval of additional financing for the state.
May 2010
On March 2010, Fitch Ratings raised Panama’s long-term foreign currency and local currency Issuer Default Ratings (IDRs) to 'BBB-' from 'BB+'.
The upgrades reflect a sustained improvement in public finances, underpinned by recent tax reforms, and the economy's resilience to the global financial crisis and associated recession.
September 2011
The amount of tax exemptions is more than double the amount the projected revenue from the tax reform being studied in Congress (2.5% of GDP).
Among the most important exemptions are sales tax (3.68% of GDP) and income tax (1.82% of GDP).
A study by the Fiscal Studies Program at the School of Economics, at the National University, with the support of Ministry of Finance, is the first formal tax expenditure study that has been conducted in Costa Rica.
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