CRITICAL ANALYSIS OF THE APPLICATION OF THE FISCAL RULE IN COSTA RICA AND REFORM PROPOSAL
Abstract
Fiscal rules are mechanisms designed to achieve a sustainable public debt path, trying to maintain spending growth or a fiscal result consistent with that objective. Although there were several attempts to apply a similar mechanism in Costa Rica, it was not until the approval of the 2018 tax reform that it was formally introduced. Designed to function under normal conditions, the Covid-19 pandemic revealed many problems in the application of the mechanism for Costa Rica, which have been exacerbated by a restrictive fiscal policy. Many problems that could generate operational difficulties in public entities would become greater as long as the fiscal rule remains unadjusted, hence the need for specific reforms to ensure reasonable application.
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