The purpose of the mission was to support the Costa Rican Ministry of Finance in preparing the draft law reforming Law 8131 on Financial Administration and Public Budgets. The work is considered technical support aimed at analysing the current law, assessing international and local experience in the 15 years since its implementation, and proposing regulatory changes in a new legal framework.

Law 1831, approved in September 2001, has been an adequate and useful law that has been instrumental in managing public resources in Costa Rica. Nonetheless, 15 years since its passage, there is a need for reflection on various elements to be reformed. In the first place, the law does not strongly empower the Ministry of Finance to control a considerable portion of public spending. Article I of the regulation, for example, excludes universities, municipalities and the Costa Rica Social Security Fund from the scope of control, while other laws have separated out institutions like banks, the Costa Rican Electricity Institute and the National Insurance Institute. Secondly, some articles turned out to be impractical or difficult to implement. Despite past efforts by the Ministry of Finance and in the 15 years since passage of the law, it has been impossible to establish a system of unit costs to guide budget and financial decisions. Lastly, there are legal loopholes and opportunities for improvement (based on best practices) that could be included in a new law. Specific cases include consolidation of results-based budgeting and public procurement policies.

Within this general framework, this advisory mission involved conducting an analysis of the current situation and a feasibility analysis of the reform under consideration, and Alain Cuenca García, a PhD in Economics from the University of Zaragoza, provided technical assistance for this purpose.

Specifically, during the mission in San José, Costa Rica, the expert had the opportunity to meet with representatives of the Ministry of Finance, MIDEPLAN, the Controller-General of the Republic, the Costa Rican Social Security Fund, and representatives of the different political parties in parliament.

This activity is part of the Reform of Tax Systems action of the Public Finance area of the EUROsociAL Programme, financed by the European Union and coordinated by the FIIAPP.