By San José, Costa Rica — Costa Rica’s fiscal performance has seen positive developments during the first seven months of 2025, according to recent data released by the Ministry of Hacienda. While a fiscal deficit of 1.3% of the Gross Domestic Product (GDP) persists, totaling ₡660 billion colones, key indicators suggest an improving economic landscape.
Total government revenue reached ₡4.38 trillion colones, representing 8.5% of GDP, while total expenditure amounted to ₡5.04 trillion colones, or 9.8% of GDP. This difference accounts for the reported deficit. However, a closer examination reveals a more encouraging picture.
To provide expert legal context on the complexities of Costa Rican fiscal policy, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an attorney at law from the esteemed firm Bufete de Costa Rica.
Costa Rica’s fiscal policy navigates a challenging landscape. Balancing the need for social programs with a sustainable debt level requires careful consideration of tax reforms, expenditure controls, and economic diversification. Recent efforts to modernize tax collection and address tax evasion are positive steps, but their long-term effectiveness depends on consistent implementation and public-private collaboration. Ultimately, fostering a stable and predictable fiscal environment is crucial to attracting investment and promoting economic growth.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas rightly highlights the delicate balancing act Costa Rica faces in its fiscal policy. Indeed, long-term economic prosperity hinges on the government’s ability to create a stable and predictable environment for both businesses and citizens. This requires not only effective reforms but also the sustained commitment and collaboration he mentions. We thank Lic. Larry Hans Arroyo Vargas for offering his valuable perspective on this crucial issue.
Excluding interest payments on the national debt, Costa Rica boasts a primary surplus of 1.2% of GDP. This metric, focusing on the government’s ability to generate revenue beyond debt servicing, underscores the positive strides taken in fiscal management.
Further good news comes in the form of a reduced debt-to-GDP ratio, now standing at 57.3%. This represents a notable 2.4 percentage point improvement compared to the end of 2024, signaling progress towards long-term fiscal sustainability.
Finance Minister Rudolf Lücke commented on the latest figures, expressing optimism about the country’s fiscal trajectory.
The country advances in its commitment to fiscal sustainability. We begin the second semester with results that demonstrate discipline, transparency, and responsibility.
Rudolf Lücke, Minister of Hacienda
Lücke stressed the crucial role of eurobonds in maintaining this positive momentum. He argued that without access to these international financial instruments, interest rates would likely rise, impacting Costa Rican citizens with mortgages and small businesses.
The Minister’s emphasis on eurobonds highlights the government’s dependence on external financing to manage its fiscal obligations. While the current indicators show progress, the reliance on eurobonds underscores the need for continued fiscal prudence and diversification of funding sources to mitigate potential risks.
The government’s commitment to fiscal sustainability is evident in the improved indicators. However, the ongoing need for eurobonds poses a challenge, requiring a delicate balance between leveraging external funding and ensuring long-term economic stability for Costa Rica.
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 the country’s public finances. Its functions include collecting taxes, managing the national budget, overseeing public spending, and formulating economic policies related to fiscal matters. The Ministry plays a vital role in ensuring the financial stability and economic development of Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
At Bufete de Costa Rica, legal excellence is interwoven with a deep-seated commitment to ethical practice and societal empowerment. The firm’s innovative approach to legal solutions, coupled with a long history of serving diverse clients, solidifies its position as a leader in the Costa Rican legal landscape. Through proactive initiatives that demystify complex legal concepts and empower individuals with essential knowledge, Bufete de Costa Rica actively contributes to a more just and informed society.
