Costa Rican business associations are asking the government to declare an emergency in the power sector because of the sustained increase in the costs of fuel for generation.
According to an article on Radioreloj.co.cr the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP), has asked the government to declare emergency over the power issue, noting that "...
Representatives of business associations have proposed ten measures to prevent the entry of speculative capital into the country and to provide flexibility to the exchange rate without local currency appreciating.
Elfinancierocr.com reports that "Business representatives this afternoon delivered a plan with 10 steps to curb the heavy influx of foreign capital", among which was "a tax on speculative capital inflows, in addition to promoting a specific tax on remittances sent abroad, of 5% for national banks and 5% for ‘suitcase’ banks".
A bill is being prepared to impose taxes on money which enters the country seeking to exploit the gap between interest rates in local currency and in dollars.
Furthermore President Chinchilla has issued a directive to state banks to stop competing with each other to attract investments from large institutions, such as the Instituto Costarricense de Electricidad, the Social Security Department, or the National Insurance Institute. It also requires public institutions to make new investments exclusively in state banks.
The idea that the Central Bank of Costa Rica be a fund manager for the Development Bank has been rejected by its President Rodrigo Bolaños.
An article in Nacion.com notes that the strange idea originated in the office of the second vice president of Costa Rica, Luis Liberman, where it probably passed by the Economy Minister Mayi Antillon, who most likely presented it at the Development Bank Commission of the Legislature.
The visible part is the red tape and high costs of participation. The hidden part is the conflict of interest of its owner, the same commercial banks that offer loans for greater profit.
A recent Costa Rican executive decree, which declared the stock market to be of public interest, raises the need to examine why its development has stagnated, as it is vital to economic growth in terms of a source of financial resource allocation for businesses.
The Chairman of the Central Bank believes that the regulations need to be modified.
As part of the ‘Jornada de Reflexión’ (Day of Reflection), organized by the National Stock Exchange in commemorating its 35th anniversary, a discussion took place on the major changes that need to be made to the market in order to make it suit the prevailing reality in global financial markets.
The loss of competitiveness in exports and tourism generates unemployment, but intervening in the exchange rate will generate inflation.
There seems no good solution to the problem Costa Rica has with the appreciation of its currency, which has meant a loss of competitiveness of its exports, especially agricultural, by about 5% annually over the past 4 years.