Public policy analyst Juan Carlos Hidalgo on his blog ‘Por la libre’ on Elfinancierocr.com offers an analysis of the Greek crisis and the accuracy with which the current government of Costa Rica is following in the footsteps of the failed Georgious Papandreou’s government.
Tax increases and cuts in government spending were the policies implemented by Papandreou, Greece’s economic foundations were threatened by a huge fiscal deficit, a policy that Hidalgo points out is the same as the current president of Costa Rica, Laura Chinchilla.
Hidalgo notes: "the fiscal deficit left by the Arias administration threatens to turn Costa Rica into the Central American Greece. The difference is that Costa Rica can always resort to the Central Bank to finance government spending through inflation tax, a threat that has been made explicitly by the president of the BCCR. Greece, having adopted the euro, had renounced that possibility. This week it became clear that the Chinchilla administration and the governing National Liberation Party have come to see Greece as a model to follow. The last one out, turn the light off... "
Source: elfinancierocr.com
More on this topic
May 2010
Greece had a 13% fiscal deficit and made the world tremble. Costa Rica’s deficit could reach 10% by the end of 2011.
Heads of households know it well, but authorities sometimes forget: you shall not spend more than you earn; a sacred rule for good management and honesty. Because it’s very easy to spend without reserve on election year, and pass onto the next government a serious problem, one almost impossible to solve without heavy social tension. Just check out what’s going on in the streets of Greece right now.
April 2010
The public finances of Costa Rica went rapidly from surplus to a 4% deficit, with negative outlook.
A preliminary analysis of the situation shows that the problem is not in revenues, which have been constant in real terms, but expenses, which have increased since August 2008.
January 2012
The country's economy, which has not yet recovered from the crisis of 2008, will suffer from a deficit for which the government can not find effective solutions.
The unbridled growth of government spending in recent years, growth which has only just been moderated, has brought the fiscal deficit to 5% of GDP annually.
June 2011
Stable interest rates and a downward exchange rate have characterized the economy in recent months.
Although interest rates have remained low and there is still room for them to fall further, the growing fiscal deficit, which has forced the government to turn to the markets to raise funds to pay interest on the debt, is threatening this possibility.
español
1876
