Business leaders in Costa Rica disapprove of the management of outgoing President Luis Guillermo Solís, who in four years was not able to propose convincing solutions to serious problems such as the fiscal deficit.
From a statement issued by the UCCAEP:
April 26, 2018.The business sector, represented by the Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP), gives a score for the four years of President Luis Guillermo Solis's management of 4.9 out of 10.
In Costa Rica, the Solis administration is trying to give the order to begin the construction and extension of 107 kilometers of the route to Limón, eventhough studies, permits and 1,200 expropriations have not yet been carried out.
President Luis Guillermo Solis could give the order to start work on Monday to the construction firm China Harbor Engineering Company (CHEC), but the project has so many tasks and procedures still pending that it is difficult to understand how the construction company will be able to start work under the current conditions.
After recognizing the serious liquidity problems faced, the government has announced it will borrow another $1 billion for a hearty lunch that others will pay for tomorrow.
The $1 billion that the Central Bank of Costa Rica (BCCR) has been negotiating since May with the Latin American Reserve Fund (FLAR) to strengthen its reserves will arrive in October of this year, according to the BCCR authorities.
A proposal has been made to raise the "Marchamo" (vehicle ownership tax) and selective consumption tax on vehicles in order to finance the construction of the modern train system which the Solis administration insists on implementing.
Despite the fact that last year proposals very similar to this were rejected in the Legislative Assembly, the Solis administration insists on raising funds to finance the construction of a modern train for the Greater Metropolitan Area.
President Solis has personally announced that the environmental impact study for the expansion to four lanes of Route 32 to Limon has now been approved by the environmental authority.
Almost two months after the National Environmental Technical Secretariat (SETENA) rejected the study as "flawed and incomplete", the institution has now granted the approval, according to President Luis Guillermo Solís through his own social networks.
The 2017 budget drawn up by the government of Costa Rica is the result of an arithmetic exercise, where the political will of the Solis administration has barely reduced maintenance and has increased privileges in the dominant state corporations.
EDITORIAL
Scandalous could be the best word to describe the magnitude of the increase of 12% which the Solis Rivera administration has made in the 2017 public budget.The 12% increase not only far exceeds the projected inflation for this year, but is disproportionate and far from reality, considering the serious and urgent fiscal problem facing the country.
President Solis has signed a decree declaring of public interest the "promotion, development and formalization of businesses in the social solidarity economy", at the same time as a bill with the same concept is not advancing in the legislature.
When the bill on the Social Solidarity Economy was presented in July 2015, theprivate sector expressed doubtsabout a concept that"... represents unfair competition against formal private companies and contributes nothing to the serious fiscal problems of the country, because it reduces the question of tax collections."
The Solis administration has announced that by the end of 2017 construction work will start on a dam to ensure a water supply for drinking and irrigation in Guanacaste.
The project to construct a dam on the River Piedras, in Bagaces, has remained on paper for almost thirty years.Estimated at $500 million, construction of the dam could be the solution to the problem of water shortages affecting one of the areas with the greatest tourist development.
While President Solis prepares to attend the summit in Chile without having a definite position, nine private unions have formed a Business Council to promote adhesion to the trade bloc.
The Chamber of Industries of Costa Rica explains that"... this mechanism of coordination of efforts between private sector entities will promote the Pacific Alliance within the business community and maintain an open and continuous dialogue with the Government and with political organizations and representatives of civil society, in order to present and submit recommendations and suggestions for the proper conduct of the process of integration and economic and trade cooperation between Costa Rica and the other countries who are members of the Pacific Alliance. "
After two years of government, the Solis administration remains indecisive and has still not resolved this vital issue, which even though it is opposed by several productive sectors of the country, needs urgent resolution.
The country's entry into the commercial alliance composed of Chile, Colombia, Mexico and Peru would represent a very significant change for the economy of Costa Rica, a change that sectors producing goods and services would have to integrate into their strategic plans, which is why they need clear signals regarding the direction to be taken.
Costa Rican business leaders have expressed their dismay at the executive branch's apparent contradictions regarding the proposed agreement on fiscal issues and the strike threats made by public unions.
From a statement issued by the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP):
Private Sector puzzled by attitude of the Executive Branch
The ban on Mexican avocado has led to an increase in imports from Chile, raising its wholesale price by more than 30%, and will cause shortages when locally produced supplies have been exhausted.
Protectionism for the Costa Rican production of avocados introduced by the Solis administration, arguing phytosanitary measures, achieved results that benefited local producers, such as increasing the price of the product and a decline in import volumes (13,061 tons in 2013 vs . 11,187 in 2015). But what is good for the local producer, is bad for consumers who are forced to pay more for the fruit, as well as seeing their right to choose what to consume violated, and eventually being prevented from simply consuming anything at all because there is no supply.
As in old fashioned patriarchal homes, if there must be suffering, the first to suffer are the stepchildren, and only afterwards, if necessary, the legitimate children.
EDITORIAL
The announcement by the Solis administration that it has a plan B in case it does not manage to get legislative approval for the proposed tax increases designed to address the serious and growing fiscal deficit, highlights the existence in Costa Rica of first class citizens and second class citizens.
The stubbornness of the Solis administration to award a highly technical job to a candidate rejected by employers confirms the importance that this specific person would have in the formulation of public tariffs.
Editor's note:
This review was written hours before the now newly appointed General Regulator of Costa Rica gave notice of his resignation from his position at the Instituto Costarricense de Electricidad (ICE).
The stagnation of the refinery project could be the reason for China's loss of interest in Costa Rica, after having stopped the disbursement of a $24 million "freebie", the purchase of $1 billion worth of Costa Rican bonds, the development of an industrial pole, and the extension of a road.
EDITORIAL
The diplomatic shift from Costa Rica which privileged mainland China over Taiwan - in contrast to all of its Central American neighbors- held the promise of an injection of Chinese investment and development in the country, in public infrastructure, energy, and manufacturing centers.