Strengthening the confidence of economic agents through a solution to the problem of public finances and moving forward with the process of vaccinating the population are key factors for the Costa Rican economy to recover quickly in the new year.
The spread of covid-19 and the restrictions imposed at the local and global levels severely affected most of Costa Rica's productive sectors, to the extent that the unemployment rate climbed to historical levels, several businesses were closed and economic activity fell sharply.
The Costa Rican government is facing a complex scenario, since by not achieving consensus to access international loans, it will be forced to seek domestic funding sources, which would put pressure on the exchange rate and interest rates to rise.
The effects of the pandemic and fiscal uncertainty are the factors that explain the rise in the price of the US currency in Costa Rica against the Colon, which on November 4 was quoted at 614.55 colons to the dollar.
According to the figures of the Central Bank of Costa Rica (BCCR), between October 19 and November 4 the selling price of the dollar has shot up, rising from ₡605.24 to ₡614.55, which is equivalent to a 2% variation.
Arguing that there is a temporary need for liquidity in colons, on October 26 the Central Bank of Costa Rica decided to participate in the secondary market by buying two different series from the Ministry of Finance, with a maturity of 9 and 10 years.
On April 13, 2020, the Board of Directors of the Central Bank of Costa Rica (BCCR) authorized its Administration to participate in the secondary securities market of the Ministry of Finance and defined the conditions under which these transactions would be executed, with the objective of mitigating situations of systemic tension caused by temporary liquidity needs in colones, informed the monetary authority.
Preventive reasons for unforeseen expenses in the context of the pandemic and low liable interest rates are some of the factors that explain the increase in the balance of short-term savings instruments in the Costa Rican market.
In the context of the spread of covid-19 and the restriction of several productive activities, the broad money supply (including cash held by the public and highly liquid financial instruments in national and foreign currency) showed a 35.7% year-on-year growth rate in June 2020, considerably higher than the 2.7% recorded in the same month in 2019, while the balance of term instruments fell, reported the Central Bank of Costa Rica (BCCR).
Setting a maximum usury rate and preventing clients from getting into debt to the extent of reducing their income below the minimum wage line are some of the changes that have arisen due to the application of the new law that has been in force since June 20.
On June 20, 2020 the Usury Law was published in the scope number 150 to La Gaceta number 147, which establishes the methodology to be used to set the maximum interest rate, from which the crime of usury will be considered to exist, details an official statement.
Because of the restriction measures decreed in the country due to the covid-19 outbreak, between March and April of this year the average hotel rate for two people decreased from $160 to $120.
According to the "Monetary Policy Report" prepared by the Central Bank of Costa Rica (BCCR), in the face of the health crisis, hotel occupancy in the country has plummeted in the first four months of the year, from 90% in January to 15% in April.
In Costa Rica, the Basic Passive Rate dropped from 4.95% to 4.80%, a drop that was influenced by the behavior of public bank rates.
The Central Bank of Costa Rica published on the afternoon of Wednesday, February 26 that after registering a considerable drop the previous week, the Basic Liable Rate fell again, in this case by 0.15% and will remain at 4.80% until next Wednesday, March 4.
In Costa Rica, a law initiative under discussion seeks to set caps on interest rates on loans, a measure that could lead to a reduction in the offer of credit for debtors classified as higher risk.
As part of a bill being discussed in the Legislative Assembly, the heads of the Central Bank of Costa Rica (BCCR) and the General Superintendence of Financial Entities (Sugef) were asked to give their views on the content of the proposal.
During 2019, the price of the dollar in Costa Rica registered multiple fluctuations; however, for this 2020, such abrupt variations are not anticipated, since the Central Bank starts the year with reserves close to $9 billion.
Data from the Central Bank of Costa Rica (BCCR) show that between February 4 and November 28, 2019, the average dollar price in the Costa Rican market fluctuated considerably, ranging from ₡614.31 to ₡562.63.
Although The Central Bank has been reducing the monetary policy rate to boost the issuance of bank credit, the speed with which the portfolio of loans in national currency grows continues to decrease.
Official data from the country's financial system indicate that by October 2017 the portfolio of loans in local currency grew to 14%, in the same month of 2018 the rate fell to 6% and by the tenth month of 2019 the increase was just 4%.
With the aim of cushioning the fall in the price of the dollar, which between November 5 and 25 was reduced in ₡18,35, in just two days the Central Bank intervened buying more than $30 million.
Of the $41.5 million negotiated at Monex during the November 22 session, the Central Bank of Costa Rica (BCCR) purchased $36 million, and of the $30.7 million negotiated on November 25, the monetary authority acquired $27 million.
Because of the growing supply of dollars in the local market, which is explained in part by the income of $1.5 billion from the recent issue of Eurobonds, so far in November the price per dollar in the wholesale market has been reduced at ₡16,55.
Official figures from the Central Bank of Costa Rica (BCCR) report a downward trend in recent weeks, as between November 5 and 22 the price has dropped from ₡585,52 to ₡568,97, equivalent to a 3% variation. See full figures.
After year-on-year variations of 1.4% and 1.6%, respectively, will be reported in Costa Rica in July and August, in September the IMAE grew 2%, again explained by the performance of the special regimes manufacturing sector.
The growth of the Monthly Economic Activity Index (IMAE) in August was driven by the production of special regimes (free zone and active perfecting), which grew at a 12% year-on-year rate, according to information from the Central Bank of Costa Rica.
Because of the country's economic situation, between 2017 and 2018 there was a 2% drop in the number of Costa Ricans who left from Juan Santamaria Airport and 4% in total expenditures abroad.
Aeris Costa Rica figures detail that between 2017 and 2018 the number of national departures from Juan Santamaria Airport went from 793,000 to 780,000. Regarding 2019 data, up to September the figure reaches 579,000.
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