Fiscal situation forces the government to cut budget expenditures until 2025

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This afternoon the Government of the Republic issued Decree No. 42798-H, which limits the growth of current transfers, one of the main growth factors in public spending in recent years, and reduces the annual execution of the acquisition items of goods and services, special services, substitutions and eventual remunerations. The foregoing for all the organs of the Government of the Republic included in the Ordinary and Extraordinary Budget Laws, from 2021 to 2025.

This is established by the decree signed by Carlos Alvarado, President of the Republic, and Elian Villegas, Minister of Finance, as a direct action by the Government. The measure will take effect once it is published in the Official Gazette La Gaceta.

“This containment of spending is part of the necessary measures to guarantee compliance with the fiscal rule and, thus, fiscal and macroeconomic stability, helping to reduce the level of debt in the coming years. It is one more example of the commitment we have to contain public spending with a medium and long-term vision, ”said Elian Villegas, Minister of Finance.

In addition, the Government presented this afternoon Bill No. 22,368, Reduction of public spending by eliminating vacant positions and freezing the increase in pensions charged to the national budget.

Games reduction

As of this year, the item for the acquisition of goods and services will begin a reduction of 7.5% each year with respect to the previous one, until reaching in 2025 an upper limit of 67.7% of what was executed during 2020. In the In the case of special services, substitutions and eventual remuneration, the reduction will be 8.5% until it reaches an upper limit of 64.1% in 2025 of what was executed in 2020.

Reduction in the items of goods and services, special services, substitutions and eventual remuneration

In addition, the decree limits the growth of the current transfers item to 0.5% each year with respect to the previous one, so the maximum executable amount in 2025 may not exceed by more than 2.53% of the amount drawn in 2020.

Containment of the growth of the current transfers item

The decree excludes the Legislative Assembly, the Judiciary and the Supreme Electoral Tribunal. However, it urges the rest of the powers of the Republic to apply the cost containment measures described.

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