Lawmakers Approve 2006 Budget Plan
Costa Rican legislators last week approved a national budget for 2006, and while the government believes it has been prudent in not approving substantial new sums for social spending, there remains concern that the budget will add to the country's growing debt burden.

Approved in a 31-18 vote by 49 lawmakers in the second debate last Tuesday, the ¢2.7 trillion colon (US$5.5 billion) budget is financed 53% by taxation and the remaining 47% by borrowing.

Despite the concerns that the budget will not help Costa Rica's debt situation, said Ricardo Toledo of the Partido Unidad Social Cristiana (PUSC), running almost last in the 2006 presidential election. Toledo was Ministro de la Presidencia in the current government before steeping down to run for the presidency.

“I'm very satisfied, and I believe the government, Ministro de Hacienda (Finance Minister) David Fuentes, and everybody is satisfied with how it ended up,” Toledo added.

However, Olman Vargas, president of the Finance Committee said legislators redirected ¢36.5 billion colons ($74.2 million) away from payments on the country's international debt to pay for increases in social spending, education, infrastructure and the health sector, which, he noted, will only serve to put Costa Rica further into debt.

Lawmakers are continuing to debate a fiscal reform package that will widen the tax base, increase tax revenues and divert more funds to the reduction of the country's mounting foreign debt.

First proposed in 2002, the fiscal reform package intends to raise some us$500 million in additional revenues, and reduce the deficit to 2.65% of GDP through a series of tax hikes and improved collection methods.

However, it has remained bogged down in the legislative assembly ever since despite attempts by government supporters to force through the reforms.

The budget now goes to President Abel Pacheco for his signature before becoming law.