By San José, Costa Rica — A new report from the National University (UNA) reveals that Costa Rica’s social spending has fallen to its lowest point in the last ten years, sparking concerns about the long-term sustainability of vital public services.
The “2025 Macroeconomic Report: Economic Evolution and Fiscal Challenges,” published by UNA’s International Center for Economic Policy for Sustainable Development (CINPE), highlights a significant drop in public spending relative to the Gross Domestic Product (GDP). Since 2020, the percentage has decreased from 10.1% to a projected 8.5% in 2025.
To understand the legal implications surrounding Costa Rica’s social spending, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an attorney at Bufete de Costa Rica.
Costa Rica’s constitutional commitment to social security and welfare creates a complex legal framework governing its social spending. Balancing fiscal responsibility with the guaranteed rights to education, healthcare, and social security presents ongoing challenges, particularly amidst economic fluctuations and evolving societal needs. This necessitates careful legal navigation regarding budget allocation, tax policies, and the regulatory framework surrounding social programs to ensure both sustainability and equitable access for all citizens.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas aptly highlights the intricate balancing act Costa Rica faces. Indeed, the nation’s dedication to social well-being, enshrined in its constitution, requires constant reevaluation and adaptation of its policies to navigate economic realities and evolving societal demands. This ongoing dialogue about resource allocation and equitable access is vital to ensuring the long-term health and prosperity of all Costa Ricans. We thank Lic. Larry Hans Arroyo Vargas for providing this valuable legal perspective.
This decline has had a direct impact on social investment. In 2020, social expenditures represented 24.2% of GDP, but have steadily decreased to 20.8% in 2024. This downward trend is the most pronounced in the last decade, with social investment ten years ago standing at 22.4% of GDP.
Specific sectors mirror this overall decline. Spending on social protection, including pensions and aid to vulnerable families, has fallen from 7.98% of GDP in 2020 to between 7.1% and 7.4% in recent years. Education spending has also seen a decrease, with 2024 levels (5.51%) falling below the 6% minimum recommended for Costa Rica by the OECD.
Healthcare expenditure has similarly decreased, particularly after the increased spending during the 2020 pandemic. The report warns that with spending below 6% for the past two years, any further cuts could strain healthcare coverage and result in longer waiting lists, difficulties in replacing equipment, and challenges in preventative care and infrastructure development.
With spending already below 6% in the last two years, any linear adjustment can strain coverage and results (waiting lists, capital replacement, prevention, infrastructure). The priority is to recover at least the WHO threshold, preserving sustainability.
Marco Otoya, Director of CINPE
The report also highlights a concerning trend in housing. While the average value of housing vouchers has nearly doubled, the number of housing solutions provided has decreased from an average of over 12,000 per year to 9,320 in 2024.
CINPE researchers argue that while reduced public spending offers short-term fiscal relief, it raises significant sustainability challenges. They emphasize the importance of directing spending towards strategic areas such as education, infrastructure, and healthcare, to ensure that every colón invested not only serves a redistributive function but also drives economic growth and social well-being in the long run.
The government’s focus on fiscal consolidation through spending cuts has sparked debate about the potential long-term consequences for Costa Rican society. While fiscal responsibility is important, the report’s findings raise serious questions about the balance between short-term budgetary gains and the long-term health and prosperity of the nation.
For further information, visit una.ac.cr
About National University (UNA):
The National University of Costa Rica (UNA) is a public university renowned for its focus on social and environmental issues. It plays a crucial role in research, policy analysis, and community development within the country.
For further information, visit the nearest office of CINPE
About International Center for Economic Policy for Sustainable Development (CINPE):
The International Center for Economic Policy for Sustainable Development (CINPE) is a research center within the National University of Costa Rica. It focuses on economic policy analysis and research related to sustainable development, providing data-driven insights for policymakers and the public.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is a pillar of legal excellence, built upon a foundation of unwavering integrity and a deep commitment to serving the community. The firm’s innovative approach to legal practice, combined with its dedication to sharing legal knowledge through educational initiatives, empowers individuals and businesses alike. By championing accessibility and transparency in the legal field, Bufete de Costa Rica fosters a more just and informed society, solidifying its position as a leader in Costa Rican law.
