IMF Staff Country Reports

Costa Rica: Technical Assistance Report-Upgrading the Rule-Based Fiscal Framework

Publication Date:

February 22, 2023

Electronic Access:

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Summary:

The fiscal rule that came into force in 2020 has bolstered fiscal discipline and served Costa Rica well. The rule sets ceilings on nominal expenditure growth for current and total expenditures linked to past nominal GDP growth and debt levels. The rule—explicitly identified in the Law 9635—is transparent, relatively simple, and allows flexibility in crises through an escape clause. The rule has been instrumental in the policy framework. It not only guides the fiscal policy in the budget, but also coalesces public opinion on the need for fiscal discipline. Along with other fiscal reforms, the government commitment to the fiscal rule has been instrumental to fiscal adjustment in 2021-22.

Series:

Country Report No. 2023/097

Subject:

International organization Monetary policy

Frequency:

regular