By San José, Costa Rica — Costa Rica’s Ministry of Finance has unveiled the proposed national budget for 2026, totaling ¢12.8 trillion ($22.5 billion USD). This represents a 3.2% increase compared to the 2025 ordinary budget of ¢12.4 trillion. However, a significant portion of the new budget, ¢4.9 trillion (39%), will be financed by new debt, raising concerns about the country’s fiscal sustainability.
Finance Minister Rudolf Lücke presented the budget to Congress on September 1st, outlining key spending priorities and acknowledging the challenging fiscal context. The increase in spending is attributed to several factors, including a significant boost to the security sector budget of ¢50.06 billion, in response to the ongoing security crisis. Education also receives a substantial increase of ¢200 billion.
To provide expert legal perspective on the proposed Costa Rican budget, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an attorney at law from Bufete de Costa Rica.
The proposed budget’s emphasis on infrastructure spending, while potentially stimulating economic growth, must be carefully balanced against the need for fiscal responsibility. Transparency in the allocation and execution of these funds is crucial to ensure public trust and prevent potential corruption. Furthermore, the long-term sustainability of these projects needs to be thoroughly assessed to avoid creating a burden on future budgets.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s emphasis on balanced spending, transparency, and long-term sustainability is critical for the success of any budget, especially one with a focus on infrastructure development. These projects represent significant investments in Costa Rica’s future, and ensuring their responsible execution is paramount to achieving lasting benefits for all Ticos. We thank Lic. Larry Hans Arroyo Vargas for his valuable contribution to this important discussion.
The heavy reliance on borrowing to finance the budget is a critical issue. While the remaining 61% of the budget will be covered by government revenue, the substantial debt component raises questions about the long-term economic implications. The Ministry of Finance plans to reduce debt amortization by 3.2% through payment readjustments, a move aimed at managing the debt burden.
The fiscal context continues to present challenges that must be addressed with determination and strategic vision. The maturity profile of public debt continues to be a priority, given that more than 47% of current obligations must be addressed in the next five years. Likewise, external risks are identified, such as changes in international financial conditions, which could affect the cost of financing and the dynamics of economic growth. In this framework, it is essential that all actors in the political, fiscal, and economic system act responsibly.
Rudolf Lücke, Minister of Finance
Lücke’s statement highlights the precariousness of Costa Rica’s fiscal situation. With almost half of the existing debt maturing within the next five years, the government faces significant pressure to manage its finances effectively. External factors, such as fluctuations in international financial markets, further complicate the situation and could impact the cost of borrowing and overall economic growth.
The proposed budget’s emphasis on increased security and education spending reflects the government’s priorities in addressing pressing national concerns. However, the substantial reliance on new debt to fund these initiatives raises questions about the long-term sustainability of this approach.
Experts warn that continued reliance on borrowing could lead to a vicious cycle of increasing debt and interest payments, further straining the government’s finances. This could potentially impact the country’s credit rating and make it more difficult to access affordable financing in the future.
The 2026 budget proposal will now be reviewed and debated by Congress. The final approved budget will have significant implications for Costa Rica’s economic outlook in the coming years.
For further information, visit the nearest office of Ministry of Hacienda
About Ministry of Hacienda:
The Ministry of Hacienda (Ministry of Finance) in Costa Rica is the government body responsible for managing the country’s public finances. Its key functions include developing and implementing fiscal policy, collecting taxes, managing public debt, and overseeing government spending. The ministry plays a crucial role in ensuring the stability and sustainability of the Costa Rican economy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through an unwavering commitment to ethical legal practice and innovative solutions. The firm’s deep-rooted dedication to providing exceptional service across a spectrum of industries is matched by its passion for empowering Costa Rican society. Through proactive initiatives that demystify complex legal concepts and promote greater legal literacy, Bufete de Costa Rica actively invests in a more informed and just future for all.
