The market regulator is preparing rules for a new type of short-term investment fund, which will be available before July.
The Superintendency of Securities (Sugeval) in Costa Rica announced that it will add to its portfolio an investment fund focused on very short term securities which are low risk and high liquidity, reported El financierocr.com. This new instrument will be approved in the first half of 2016.
The main reference rate for loans and investments has gone up for the second week running, from 6.85% to 6.90%.
The Central Bank of Costa Rica has reported that the passive base rate, an indicator of the average interest rates giving by financial institutions for periods of 150 to 210 days, has gone up from 6.85% to 6.90% and will maintain this level for until at least 11 June.
The reference rate for loans and investments in the country will stand at 6.85% until at least June 4.
The Central Bank of Costa Rica reported that the passive base rate, an indicator of the average rates given by financial institutions on savings for periods of between 150 to 210 days, has gone up up from 6.75% to 6.85% and will stay at this level at least until June 4.
The primary reference indicator for loans and investments in the country will stand at 6.75% at least until 28 May.
The Central Bank of Costa Rica reported that the passive base rate, an indicator of the average uptake rates given by financial institutions on maturities of 150-210 days will remain at 6.75% at least until 28 May.
Through a mutual fund, the World Bank and other multilateral institutions, will be awarding $50 million to finance small and medium enterprises in the region.
With a mix of capital and a long-term soft loan the III Caseif fund, managed by Lafise Panama, will have $50 million for small and medium businesses who require funds to finance their operations.
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 ...
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.
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.
How to cope with capital markets during 2013: regulatory reactions, regulatory changes, fiscal challenges and technological advances.
Posted in Construcción Magazine
Issue No. 167
By: Alan Saborio, Managing Partner at Deloitte Costa Rica
The study "Capital Market Outlook 2013" by Deloitte recounts the great challenges facing the capital market during 2013, product of the economic crisis, regulatory reactions, regulatory changes, and fiscal challenges and technological advances.
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.
The Chamber of Banking and Financial Institutions has responded to inquiries from legislators about the proposed "Act to discourage the inflow of foreign capital."
A statement from the Chamber of Banking and Financial Institutions reads:
Regulation of "Hot Money" entry
• Current wording of the document may affect "healthy" investments made in the country, to the detriment of various productive sectors which depend on them.
The regulations for the investment of venture capital funds, which were recently published by the Superintendency of Securities, have generated positive expectations from market participants.
Although there are differences of opinion, most experts in the field feel the addendum to the regulation of investment funds covers all the minimum elements that must be detailed in an instrument of this nature.
The primary objective of this scheme is the temporary investment in private bonds of recommended companies, which have not been registered on a stock market over the past five years.
Costa Rica’s National Council of Financial System Supervision approved the regulations covering the operation of the long-awaited Venture Capital Funds.
These instruments are an alternative for financing projects or companies, especially those which by their nature have limited access to traditional funding mechanisms.
The company provides pricing data for valuating financial instruments, and will begin operating in Costa Rica.
It has already been authorized by financial supervisor Sugeval. In order to provide its services, it must also sign a contract with the Stock Exchange.
“The company will Presumably offer its services from Panama. It is now a direct competitor of PIP Centroamérica in Mexico, and also operates in Brazil.
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