Approved in a 31-18 vote by 49 lawmakers in the second debate last Tuesday, the 2.7 trillion colon (US$5.5 billion) budget is financed 53% by taxation and the remaining 47% by borrowing.

Despite the concerns that the budget will not help Costa Rica's debt situation, Ricardo Toledo of the Social Christian Unity Party told the Tico Times that both he and the government were happy with the end result.

“I'm very satisfied, and I believe the government, Finance Minister (David Fuentes) and everybody is satisfied with how it ended up,” he stated.

However, Olman Vargas, president of the Finance Committee told the Tico Times that legislators redirected 36.5 billion colons ($74.2 million) away from payments on the country's international debt to pay for increases in social spending, education, infrastructure and the health sector, which, he noted, will only serve to put Costa Rica further into debt.

Lawmakers are continuing to debate a fiscal reform package that will widen the tax base, increase tax revenues and divert more funds to the reduction of the country's mounting foreign debt. First proposed in 2002, the fiscal reform package intends to raise some $500 million in additional revenues, and reduce the deficit to 2.65% of GDP through a series of tax hikes and improved collection methods. However, it has remained bogged down in the legislative assembly ever since despite attempts by government supporters to force through the reforms.

The budget now goes to President Abel Pacheco for his signature before becoming law.