The steady flow of investments that came into the country in 2012 and part of 2013 has been reversed.
This was indicated by the president of the Central Bank of Costa Rica, without giving details of the extent of the phenomenon.
Rodrigo Bolaños told Elfinancierocr.com that "... Capital inflows into the Costa Rican economy between 2012 and early 2013, to take advantage of high local interest rates, have begun a process of gradual withdrawal ...
The mere name of the bill approved by Congress "An Act to Discourage Entry of Capital from Abroad" reveals how dangerous this regulation could be for the Costa Rican business climate.
An article in Nacion.com reports that "...This bill was submitted to Congress a year ago, promoted by the Government, after the central bank detected a wave of speculative capital attempting to take advantage of interest rates in the country and then take it abroad."
A year after first being proposed, and under different economic conditions, progress has been made on the adoption of the law to discourage "hot" capital.
From a press release issued by the Legislative Assembly of Costa Rica:
MPs voted in a first debate, to put a brake on the entry of speculative capital into the country, known as hot money, with an initiative submitted for discussion by the Executive.
Experts consider that real estate, physical and virtual casinos, and failed businesses have conditions for being used in money laundering activities.
An article in Prensalibre.cr, reports that Luis Amador, Chairman of the Compliance Committee of the Costa Rican Banking Association (ABC), said: "From the economic activities that we identified as most at risk, the real estate sector is where the most money is laundered.
The bill which taxes interest generated by speculative capital has been stalled because it respective Legislative Commission has not been formed yet.
Edgar Ayales, Finance Minister recalled the significance of the future law and added that the problem could take three or four weeks.
"This is because, according to the vice minister of the same portfolio, Randall Garcia, they have not yet officially named the new team for the Treasury Commission, which manages the topic", reported Prensalibre.cr.
The business sector is calling on Congress to pass the bill which charges a 30% tax on interest gained by speculative capital.
From a press release issued by the Costa Rican Union of Chambers and Associations in the Private Business Sector (UCCAEP):
The Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP) is urging MPs to approve, as soon as possible, the bill which levies a 30% tax on interest earned on speculative capital, which was ruled on in February by the Committee on Financial Affairs.
The taxes and proposed measures to control the influx of "hot capital" could be confiscatory and in violation of the principles of reasonableness and proportionality.
The bill which aims to grant extraordinary powers to the executive branch to regulate the entry of foreign capital into the country was approved in committee and has been passed to the legislative plenary for discussion.