SAN JOSE, COSTA RICA – September 30th, 2012 – Both the internal and external debt that the country took upon in 2011 grew at an alarming rate, fast approaching the 60%-of-GDP limit set by the Public Credit Council (DCP, in Spanish). As of the end of 2011, the debt has reached 49.7% of Costa Rica’s GDP.
According to the General Controller’s office, in 2011 – the latest report available – the internal and external obligations of the public sector, including the public financial sector, rose to 10.3 trillion colones – close to $21 billion USD.
Also, of the 19 public loans in force during the period, totaling about $1.6 billion, the country has repaid $654 million, leaving a balance of $924 million.
Despite public criticism, “Hacienda” (Treasury department) defends debt through public loans, calling them cheaper than other options.
Hacienda blames the effects of the economic crisis, as well as large increases in public spending, for the drastic rise in the nation’s debt.
The true increase in public debt was 12.1% from 2010 to 2011 – 7.9 percentage points more than the GDP growth.
It is important to note that these figures do not include the progressive increases in internal indebtedness we’ve seen during 2012, made to keep up with government spending.
The situation doesn’t seem as though it will improve in the future, either. Just this month alone, we reported that CCSS is applying for a $400 million loan from the World Bank, and has agreed to another $400 million loan from China to widen to the road to Limon.
Worse still, 43% of the $6.4 billion National Budget for 2013 will be financed with debt.
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