VZCZCXYZ0000
RR RUEHWEB

DE RUEHSJ #0279/01 0961456
ZNR UUUUU ZZH
R 061456Z APR 09
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC 0717
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SAN JOSE 000279 
 
SIPDIS 
 
DEPT FOR WHA/CEN AND EEB/IFD/OMA: ASNOW AND JJACOBY 
PLEASE PASS TO TREASURY FOR SSENICH 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL SNAR CS
SUBJECT: COSTA RICAN BUDGET TRANSPARENCY 
 
REF:  A) STATE 28885 
B) 08 SAN JOSE 0220 
 
¶1. SUMMARY: Embassy San Jose continues to affirm the transparent 
fiscal management of Costa Rica's national budget.  Minister of 
Finance Guillermo Zuniga leads a reform-minded ministry that is 
committed to advancing management and budgeting sophistication while 
providing public access to the Ministry's publications.  The 
Department of Treasury's Office of Technical Assistance's (OTA) 
programs on tax administration, budget management, and debt 
management have enhanced the Minister's reform efforts.  As a 
conscious policy, the Ministry strives to further improve 
transparency to move taxpayers from the informal sector to the 
formal sector by enhancing the Ministry's credibility and 
reputation.  In short, the answer is "yes" to all the questions 
posed by Ref A, per the SFOAA 2009: Costa Rica will receive USG 
assistance in FY 2009; the GOCR's budget, including income and 
expenditure figures, is publicly available; and those public figures 
are accurate.  END SUMMARY. 
 
------------------------------------------ 
MINISTRY OF FINANCE PRACTICES TRANSPARENCY 
------------------------------------------ 
 
¶2. Post prepared the following responses to the questions presented 
in Ref A: 
 
-- Is the central government expected to receive, or is it already 
receiving U.S. foreign assistance funded using FY 2009 funds? 
 
Yes.  For FY 2009, the GOCR will receive USG assistance in the form 
of Foreign Military Financing (FMF), International Military 
Education and Training (IMET), International Narcotics Control and 
Law Enforcement (INCLE), and other funding, most of which support 
important bilateral and regional security and law enforcement 
programs, including the Merida Initiative. 
 
-- Is the host country's budget publicly available? 
 
Yes.  GOCR Budget documents are public and readily accessible 
through the internet.  The Ministry of Finance provides the budget 
in both hard copy and digital formats.  For example, the budget for 
2009 is available at the following webpage address: 
 
https://www.hacienda. go.cr/NR/rdonlyres/F0DEF0D2-E58D- 
4F20-9709-F2156BB8DD43 /21387/Ley2009Ingresos.pdf 
 
In addition, budget documents are available on the Ministry of 
Finance's website for years 2004-2008. 
 
-- Are incomes and expenditures included in the publicly-available 
budget? 
 
Yes. Both the revenue and expenditure sides of the fiscal ledger are 
publicly available.  In fact, the Ministry of Finance openly 
discusses fiscal spending scenarios within the national budget with 
the national legislature each November, the designated month for 
annual budget debate and approval by the legislature. 
 
-- Do publicly-available budget documents accurately reflect actual 
government incomes and expenditures? 
 
Yes, and increasingly so as the Ministry of Finance is improving its 
overall budget management, with U.S. Treasury OTA assistance. 
 
------------------------------ 
BUDGETING IMPROVEMENTS CONTINUE 
------------------------------ 
 
¶3. Since last year's report (Ref B), the Ministry of Finance 
launched an office of Internal Affairs (IA) unit -- akin to an 
inspector general's office -- to investigate illicit activity or 
corruption within the Ministry.  Guided by OTA assistance, the IA 
unit completed 12 investigations, processed 22 complaints (referring 
one for criminal investigation), and processed five administrative 
actions with employees in 2008.  Vice Minister of Revenue 
Administration Jenny Phillips recently told us that the work of the 
IA unit is vital to building confidence among Costa Rica's citizenry 
for two reasons:  (1) to further build operational credibility of 
the Ministry (which is relatively better-run than most finance 
ministries in Latin America) and (2) to attract more taxpayers from 
the informal sector into the formal sector. 
 
¶4. As for USG assistance to the Ministry, Minister Zuniga recently 
praised OTA programs in a meeting with Treasury DAS Nancy Lee at the 
IDB meeting in Medellin.  He stated that OTA programs were 
"tremendously helpful in areas such as tax collection, Treasury 
management, and expenditure evaluation."  As we concluded in last 
year's report, the partnership of Costa Rica's Ministry of Finance 
and the OTA has been a win-win situation for the GOCR and the USG. 
 
¶5.  COMMENT:  Costa Rica's April 2, 2009 inclusion as one of four 
countries in the OECD's list of "jurisdictions that have not 
committed to the international agreed tax standard" will likely 
increase the current Costa Rican administration's work with OTA.  On 
April 3, Post received a call from Minister Zuniga himself 
emphasizing his acceptance of the OTA suggestion that Costa Rica 
regulate the Internet gambling sector using Antigua as a possible 
model.  (This is following a recent OTA assessment visit, septel.) 
 
 
WILSON