What do we know about the negotiations between Costa Rica and the IMF for 2021?

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What is the government looking for?

Expanded Service Agreement, a tool that allows the country to build a fiscal consolidation route with the IMF. It grants access to $ 1.75 billion from the IMF and enables financing from other multilaterals for the next few years.

  • Preserve social investment, preserve investment and capital spending.
  • Protect the most vulnerable people.
  • Initial budget cuts 2021: 368 billion (0.97% of GDP)
  • Additional cuts made by the Legislative Assembly: 161 billion (0.42% of GDP)
  • 2021 spending reduction: 1.4% of GDP

Bills Presented

  • Public Employment Framework Law (See bill) Note: Changes must be made via motions to maximize savings in public spending.
  • Law of Reduction of Tax Benefits and Adjustment of Rates in Capital Income to Strengthen the Tax System (See bill) Note: Includes eliminating the income exemption on the School Salary.
  • Special Tax Law on Lottery Prizes and Other Games of Chance that the Social Protection Board sells, distributes or markets (See bill)
  • Reform of the General Customs Law (See bill)

Bills to present

  • Tax on luxury homes (modifying the current one)
  • Global Income (Multisectoral Dialogue Agreement)
  • Contribution of Profits from State Public Companies
  • Freezing of Pensions Charged to the National Budget in excess of 450,200 colones (until public debt is less than 60% of GDP) Note: This would not affect the pensions of the CCSS IVM.
  • Sale of the Conape Portfolio (Multisectoral Dialogue Agreement)

Executive decrees signed

Executive Decree 42798-H for the fulfillment of the fiscal rule in current transfers, acquisition of goods and services, special services, substitutions and eventual remunerations. Note: It will be available the afternoon of January 11.

What about the bank transaction tax and the VAT increase?

In principle, both proposals were rejected and will not be presented to the IMF

¿Quienes negocian?

Elian Villegas
Pilar Garrido
Manuela Goretti
Rodrigo Cubero

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