The Growth of fiscal deficit, seen as a growth on the shortfall in government finances, is generating a higher debt and affecting the domestic interest rates. Furthermore, in order to meet interest payments and compensation, authorities have sacrificed capital expenditures (investments) which affect the competitiveness of the economy.
That is the way economists from Acobo firm analyzed September’s fiscal results, in which they perceived a slowdown in the growth of the deficit, but an increase of the debt.
So far this year, the Ministry of Finance has coped with their financial needs without pushing interest rates by using several methods such as primary market, direct sales, swaps, and reverse auctions.
For instance, through the Treasury Direct Platform, the Government has collected 1,3 billion colones accumulated until August 31th, 2016.
However, there are factors such as the lack of financial planning in medium and long term, tax evasion and the characteristics of the government spending that are causing the government’s expenditures to exceed the incomes, thereby the public debt increases.