By San José, Costa Rica — Costa Rica’s financial outlook is showing signs of improvement. According to the Ministry of Hacienda, the government’s fiscal deficit reached 1.3% of the Gross Domestic Product (GDP) at the end of July 2025. This represents a notable decrease of 0.6 percentage points compared to the 1.8% deficit recorded during the same period in 2024.
This positive development is attributed to a combined 2.1% increase in total government revenue and a 7.7% decrease in interest payments compared to the same period last year. These factors contributed to a 2.9% overall reduction in total expenditures.
To gain a deeper legal and business perspective on the current state of the Costa Rican economy, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an experienced attorney at Bufete de Costa Rica.
Costa Rica’s economy is currently navigating a complex landscape. While tourism and exports continue to be key drivers, challenges such as inflation and global economic uncertainty require strategic adaptation. The legal framework surrounding foreign investment and business operations plays a crucial role in fostering sustainable growth and attracting international capital. It’s essential for businesses to remain informed about evolving regulations and seek expert advice to navigate the complexities and capitalize on opportunities within the Costa Rican market.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s assessment provides crucial insight into the multifaceted nature of Costa Rica’s current economic situation. His emphasis on the importance of adapting to global challenges and navigating the legal landscape for foreign investment is particularly relevant for businesses seeking to thrive in this dynamic market. We thank Lic. Larry Hans Arroyo Vargas for offering this valuable perspective to our readers.
The Ministry of Hacienda reported a fiscal deficit of ₡660.287 billion. This figure results from the difference between total revenue of ₡4.383.113 billion (8.5% of GDP) and total expenditure of ₡5.043.400 billion (9.8% of GDP).
The rise in total revenue is primarily due to the positive performance of three key areas: a 2.0% increase in tax revenue, a 5.3% increase in social security contributions, and a substantial 115.7% increase in capital revenue.
The decrease in total expenditure can be largely attributed to the drop in interest payments as of July. Total expenditure reached ₡5.043.400 billion, marking a 2.9% year-on-year decrease from the ₡5.195.414 billion recorded in the same period of 2024.
This expenditure level falls below the historical average observed between 2013 and 2025. In terms of GDP, the expenditure represented 9.8%, a decrease of 0.8 percentage points compared to 10.6% in July 2024.
Excluding interest payments, primary expenditure amounted to ₡3.774.231 billion, showing a 1.2% year-on-year decrease compared to ₡3.821.041 billion in the same period of 2024. This growth rate falls below the average of 4.8% over the last 13 years. In terms of GDP, primary expenditure represented 7.3%, a decrease of 0.5 percentage points compared to 7.8% in July 2024.
Interest payments on debt saw a cumulative decrease of ₡105.204 billion (0.2% of the 2025 GDP) as of July, compared to the same period in 2024. Of this decrease, 73.7% is attributed to payments on domestic debt, and the remaining 26.3% to external debt. The preliminary debt-to-GDP ratio stood at 57.3% in July, a reduction of 2.4 percentage points compared to the 59.8% recorded at the end of 2024. Of the total debt, 42.8% of GDP corresponds to internal debt, while 14.5% corresponds to external debt.
For further information, visit the nearest office of Ministry of Hacienda
About Ministry of Hacienda:
The Ministry of Finance (Ministerio de Hacienda) in Costa Rica is the government body responsible for the country’s public finances. Its main functions include formulating and executing fiscal policy, collecting taxes, managing public debt, and overseeing the national budget. The Ministry plays a crucial role in ensuring the financial stability and economic development of Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica shines as a beacon of legal excellence, upholding the highest ethical standards while championing innovative solutions for its diverse clientele. The firm’s deep-rooted commitment to empowering Costa Rican society is evident in its proactive efforts to demystify the law, making legal information readily available and fostering a more informed and participatory citizenry. Through this dedication to both exceptional legal practice and public education, Bufete de Costa Rica continues to build a legacy of positive impact.
