Given the agreement reached by the Alvarado administration and the IMF for Costa Rica to access a $1.75 billion loan, the business sector is calling for a reduction in public spending and for detailed information on the scope of the agreement signed by both parties.
In an attempt to ease the fiscal and economic crisis the country is going through, last year the Alvarado administration began negotiations to access a loan for $1.75 billion to be requested from the International Monetary Fund (IMF).
After the UCCAEP in Costa Rica began to negotiate the lifting of the blockades with the self-proclaimed group Rescate Nacional, promoter of the protests, several business chambers distanced themselves from that decision and others have expressed their support.
Given the wave of protests and blockades that have been reported in the country, which arose after it was reported that to access a loan from the International Monetary Fund for $1.75 billion, the government planned to tax financial transactions, raise the tax on the profits of companies and persons, and increase the tax on real estate. The Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP) decided to negotiate the lifting of the blockades.
Although the Alvarado administration reversed the initial proposal to ask the IMF for $1.75 billion in financing and called for an inter-sectoral dialogue, Costa Rica is semi-paralyzed by the blockades that are taking place on various roads in the country.
At the height of the pandemic and economic crisis, the Costa Rican president announced, on a national chain, an economic recovery plan with no clear direction, no assigned leaders and no concrete actions.
In the message broadcast on the night of July 12, President Carlos Alvarado vaguely explained part of the plan to be adopted to overcome the health and economic crisis generated by the spread of covid-19.
Procomer, an entity that leads since 2016 the project of the Unique Investment Window in Costa Rica, says that 12 procedures related to the opening of companies and entry into the free zone regime, are already in the testing phase.
The aim of the Foreign Trade Promoter (Procomer) is to integrate in a single digital process, the more than 68 procedures that currently must be carried out in different ministries and municipalities to open and operate a business in Costa Rica.
In accordance with the decision taken by the Chambers of Commerce and Industry, the banana growers' union in Costa Rica decided to leave UCCAEP, after having been affiliated for more than 30 years.
In Costa Rica, the Congress approved in first debate a bill that authorizes employers to suspend, from the first day of demonstration, the payment of wages to public sector workers who are on strike.
The Legislative Assembly voted in the first debate on file 21049, a law to provide legal security about the strike and its procedures, which seeks to eliminate the exaggerated privileges that employees of state entities have when they decree and execute a strike in the public sector, the Legislative Assembly informed on Tuesday, September 3.
Businessmen regret the fact that in Costa Rica is constant the creation of new taxes, fees and canons as an easy and quick solution to problems affecting the country, such as the bill that seeks to tax the use of plastic.
Project No. 21159 "Law to solve the contamination of plastic waste", which was presented to the National Assembly by the deputy of the ruling party Paola Vega, contemplates the collection of a tax for the importation or nationalization of plastic inputs, for selling or consuming articles of this material.
The power of public employees' guilds in the country was evidenced by the agreement that authorities of the Social Security Fund agreed to sign in order that employees of the entity may continue to enjoy privileges to the detriment of others.
EDITORIAL
Arguing that "judicializing" the strike was the only and best way out that could be achieved in the short term, the highest authorities of the Costa Rican Social Security Fund (CCSS) complied with the pressures of trade guild members, who with the desire to maintain the differential treatment they have enjoyed for many years, suspended access to basic health services, even carrying out actions as despicable as closing a blood bank and paralyzing equipment for cancer treatment.
The effects of the reduction in the Monetary Policy Rate and the lowering to 12% of the minimum legal reserve for banks will take months to be perceived, and without other parallel actions that impact the business sector more quickly and effectively, the economic reactivation of Costa Rica will not be possible in the short term.
According to the latest report of the Central Bank of Costa Rica (BCCR), when comparing the level of economic activity recorded in March this year with the same month of 2018, it is observed that most economic activities slow down their growth, which was reflected in the slowdown of the general indicator. See full report.
Reducing social security contributions, lowering the price of electricity and simplifying procedures in the country are part of the changes proposed by Costa Rica's private sector to reactivate the economy.
Representatives of different productive sectors agree that immediate actions focused on improving the performance of the Costa Rican economy should be implemented.
Faced with the Costa Rican government's plans to issue $6 billion in debt over six years, the productive sector demands that "parallel and complementary actions for economic reactivation" must be implemented.
Currently, the deputies of the Legislative Assembly of Costa Rica have in their hands the bill that would authorize the government to issue debt securities in the international market (Eurobonds), a proposal that contemplates that in the first two years $1.5 billion are issued each year, and that in the remaining four $3 billion are issued.
Because of doubts that have arisen in the business sector, in Costa Rica it was reported that the start of shareholder registration was postponed six months and will enter into force on September 1 of this year.
The aim of this process is to facilitate compliance with the obligation that companies must inform the Treasury on the composition of its share capital, as well as the identification of final beneficiaries, under the provisions of the Law to Improve the Fight against Tax Fraud, a statement from the Central Bank of Costa Rica (BCCR).
The greater interest in studying social sciences and the lesser inclination for training in technical or scientific areas may be partly because of the preference of professionals for employment in a government institution rather than in the private sector.
According to data from the National Council of Rectors (Conare), between 2006 and 2016, in Costa Rica the careers in the area of Social Sciences registered the highest growth according to the proportion of graduates, going from 36.2% to 45.5% of the total number of students.
The Central Bank estimates that Costa Rica's economy will increase by 3.2%, mainly because of private consumption and a rebound in public investment.
According to the Central Bank's 2019-2020 Macroeconomic Program, the Costa Rican economy will increase by 3.2% in 2019 and by 3% in 2020.
The authorities consider that economic growth in 2019 will be boosted by private consumption, reflecting the increase in confidence after the approval of the fiscal reform and the impact of the improvement in the terms of trade on disposable income, and by government consumption (recovery effect after the strike).
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