Eternal conflict over the import of onions: Now the government is accusing importers of speculating with import volumes, distorting market expectations.
Panamaamerica.com.pa reports that "... The Minister of Agricultural Development, Jorge Arango, has accused importers of market speculation, saying that they will be importing an overwhelming amount of onions, when in fact it won't be true.'They are saying that they will import 800,000 kilos of onions and what they are bringing in are 10,000 kilos, causing despair among producers and depressing the local market'. "
The government has extended the price freeze on seven basic food products, including red beans and ground beef, for 30 days.
From a statement issued by the Government of Honduras:
The Government of the Republic of Honduras through the Ministry of Economic Development informs the Honduran population in general, that it has been determined by Ministerial Agreement to establish throughout the national territory the maximum retail price for popular consumer products for a period 30 days.
The cattle farmer's guild wants to emulate the livestock auction mechanisms that are implemented in Costa Rica and Nicaragua in order to regulate the marketing of livestock and prevent price gouging.
The proposal is mainly that product price be set by supply and demand, thus eliminating middlemen and optimizing the beef marketing chain.
Starting July 1st controls will be applied on the maximum prices of products in a list of 22 staple goods.
Sirloin steak, rib steaks, ground beef, shanks, breast, pork chops, chicken, tuna, sausage, high quality rice, macaroni, bread, onion, yam, potato, domestic tomato, cassava, beans and lentils, are some of the goods whose prices will be controlled by the State, by decree in force from July 1, 2014, the first day of the new administration.
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.
Air fares rose from $1,100 to $2,500, threatening to cause a dramatic drop in the flow of tourists from Venezuela to Panama.
Speculation and distortions in the foreign exchange market have caused Venezuelan air tickets to become the subject of hoarding "resulting in there being to date no seats available to Panama for the remainder of the year."
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. The approved text is the same as presented by the Executive, having incorporated the changes requested by the banking sector.
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:
The Chamber of Banking and Financial Institutions of Costa Rica proposes that the law should specify which types of capital inflows will be discouraged.
A statement by the Chamber of Banking and Financial Institutions:
Hot Capital
Banks Chamber warns of gaps in Bill and proposes adjustments
• Project "Act to discourage inflow of foreign capital" Record # 18685 is pending in the Legislature.
A bill to discourage influxes of speculative capital in Costa Rica, gives the Central Bank power to change the tax.
In savings certificates at a state bank income tax could reach 38%, when the 30% is added to the current 8%. For returns of mutual funds, which incur 5%, the amount to tax could be set at up to 35%.
A bill is being prepared to impose taxes on money which enters the country seeking to exploit the gap between interest rates in local currency and in dollars.
Furthermore President Chinchilla has issued a directive to state banks to stop competing with each other to attract investments from large institutions, such as the Instituto Costarricense de Electricidad, the Social Security Department, or the National Insurance Institute. It also requires public institutions to make new investments exclusively in state banks.
"We will not allow speculative capital to come and do what it wants with the Costa Rican economy" - President Laura Chinchilla
An article on Elfinancierocr.com reports that President Laura Chinchilla said that "the Executive Branch is to evaluate the implementation of constraints for speculative capital inflows."
Investors are focusing on local currency due to its renewed value and the issuance of bonds at higher interest rates.
Elperiodico.com.gt outlines, "The Bank of Guatemala (Banguat), informed that payments in foreign currencies reached Q21.3 billion in December and Q23.0 billion during February, while payments in Quetzals went from Q106.2 billion to Q105.6 billion over the same period of time. This means there are fewer Quetzals in the economy, triggering an appreciation of domestic currency against a greater presence of foreign exchange."
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