The Central Bank is not ruling out intervening in the exchange market when it considers that the movement of the dollar against the Colon could jeopardize keeping inflation under control.
At a time when exporting companies insist on giving more flexibility to the exchange rate in order to favor a devaluation to improve their competitiveness abroad, the central bank is standing firm in its position to intervene in the exchange rate when necessary to maintain stable inflation.
"There are many ways to define populism, but perhaps the most accurate is that it is a form of social and economic demagogy that sacrifices the future of a country for a fleeting present" - Mario Vargas Llosa
In fits and starts, the president of the Legislative Assembly of Costa Rica has approved the state budget for 2015, after a majority of legislators voted against it, in an arbitrary exercise supposedly covered in a legal vacuum on the subject. Previously, the Assembly had rejected three different motions containing spending cuts in the budget, including one generated from the very same Ministry.
The discretionality of interventions made by the central bank in the foreign exchange market could open the gate for unjust enrichment of those who have inside information.
In the best of democratic worlds, the intervention of public employees in the economy generates income transfers between the sectors within the economy, according to state policies that are largely accepted by the population.
Former Presidents of the Central Bank of Costa Rica have criticized the bill which sets two equal objectives for the institution: inflation control and boosting production.
They agree that the Central Bank has shown that it does, but remain unconvinced that an expansionary monetary policy can be implemented to boost production indefinitely. Also, the experts believe that although both goals have similar weight, priority is always given to one over the other.
For Eduardo Lizano, President of the Central American Academy, the fast benefits that were expected from the DR-CAFTA may not materialize
Due to the financial crisis in the US and Europe, Central America can expect to see a drop exports, tourism, real estate investments, and remittances sent home by immigrant workers, he said in an interview with IPS.
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