NEO-LIBERAL
Costa Rica: President-elect Chaves wants to 'improve' deal with IMF
Costa Rican President-elect Rodrigo Chaves offers a press conference one day after being elected in the second round, in San José, on April 4, 2022. (AFP/Luis ACOSTA) (Luis ACOSTA)
Moises AVILA, David GOLDBERG
Mon, April 4, 2022
Costa Rica aims to improve its deal with the IMF, president-elect Rodrigo Chaves said Monday, a day after his election as the Central American nation's next president.
He was referring to the deal signed by the International Monetary Fund (IMF) and the outgoing government for a loan of more than $1.7 billion.
"The IMF is not a source of resources for government financing needs. We see it as an instrument to give confidence to those who have to lend us money, (as proof) that Costa Rica will be able to honor its debts," said Chaves, a former World Bank executive for nearly 30 years.
"The Fund needs to be grateful to us for more ambitious public policy measures in terms of economic recovery and fiscal responsibility" in order to allow Costa Rica to have access to funding from other bodies, he said.
"We are not going to relax the commitment (made to the IMF) for sound and responsible public finances," he stressed.
At the end of March, the IMF approved the second installment of $284 million provided for in the agreement signed on March 1, 2021, while giving Costa Rica more time to carry out the reforms agreed to in order to reduce its public deficit.
The IMF demanded in particular the adoption of a law on pensions and public employment in order to reduce public spending.
Costa Rica ended fiscal year 2021 with a deficit of 5.18% of GDP, compared to 8.03% in 2020. Public debt stands at over $42.4 billion (over 70% of GDP).
mav/mdl/caw
Pro-Market Economist Wins Costa Rica Presidential Election
Michael McDonald
Mon, April 4, 2022
(Bloomberg) -- Former World Bank economist Rodrigo Chaves won Costa Rica’s presidential election pledging to cut the deficit and attract foreign investment.
His rival Jose Maria Figueres conceded, and Chaves led with 53% to 47% for Figueres, with 98% of the votes tallied on Sunday night.
Long an oasis of stability in a region plagued by violence, Costa Rica had a choice of president between two investor-friendly candidates, setting it apart from neighbors led by fiery radicals such as El Salvador’s Nayib Bukele and Nicaragua’s Daniel Ortega.
Chaves, 60, promised to boost growth with more foreign investment and higher levels of tourism. The U.S.-educated president-elect has pledged to reduce the government’s fiscal deficit and said he favors a close relationship with the International Monetary Fund. The government signed a $1.8 billion extended fund facility with the multilateral lender last year.
In his victory speech Chaves said he would modernize the state, create jobs and govern with “transparency and austerity.”
Living Standards
Costa Rica has long enjoyed some of the best living standards in Latin America, but has more recently suffered from mediocre economic performance and seen its growth rate lag behind peers such as the Dominican Republic and Panama.
The nation’s economy expanded 3.9% last year and will grow 3.5% this year, according to the International Monetary Fund. Consumer prices in February rose 4.9% from a year earlier, above the bank’s 2-4% inflation target range.
Costa Rica’s dollar-denominated bonds traded higher on Monday, with those due in 2045 at 99.8 cents on the dollar. The nation’s bonds have returned 1.4% this year versus an average loss of 9.5% across emerging markets, according to data compiled by JPMorgan Chase & Co.
Chaves, who earned a Ph.D. in economics from Ohio State University, promised to cut red tape to foster an environment where entrepreneurs can thrive and said he can promote a low interest rate environment to spur investment.
He worked 27 years at the World Bank, becoming country director for Indonesia in 2013. During the campaign, he came under fire over sexual harassment allegations made while he worked at the bank. He denied any wrongdoing, and attributed the accusations to misunderstandings caused by cultural differences.
Chaves served six months as Costa Rica’s finance minister under President Carlos Alvarado before stepping down in May 2020 over what he said were differences with Alvarado on spending cuts. Chaves will be sworn in as president on May 8.
Michael McDonald
Mon, April 4, 2022
(Bloomberg) -- Former World Bank economist Rodrigo Chaves won Costa Rica’s presidential election pledging to cut the deficit and attract foreign investment.
His rival Jose Maria Figueres conceded, and Chaves led with 53% to 47% for Figueres, with 98% of the votes tallied on Sunday night.
Long an oasis of stability in a region plagued by violence, Costa Rica had a choice of president between two investor-friendly candidates, setting it apart from neighbors led by fiery radicals such as El Salvador’s Nayib Bukele and Nicaragua’s Daniel Ortega.
Chaves, 60, promised to boost growth with more foreign investment and higher levels of tourism. The U.S.-educated president-elect has pledged to reduce the government’s fiscal deficit and said he favors a close relationship with the International Monetary Fund. The government signed a $1.8 billion extended fund facility with the multilateral lender last year.
In his victory speech Chaves said he would modernize the state, create jobs and govern with “transparency and austerity.”
Living Standards
Costa Rica has long enjoyed some of the best living standards in Latin America, but has more recently suffered from mediocre economic performance and seen its growth rate lag behind peers such as the Dominican Republic and Panama.
The nation’s economy expanded 3.9% last year and will grow 3.5% this year, according to the International Monetary Fund. Consumer prices in February rose 4.9% from a year earlier, above the bank’s 2-4% inflation target range.
Costa Rica’s dollar-denominated bonds traded higher on Monday, with those due in 2045 at 99.8 cents on the dollar. The nation’s bonds have returned 1.4% this year versus an average loss of 9.5% across emerging markets, according to data compiled by JPMorgan Chase & Co.
Chaves, who earned a Ph.D. in economics from Ohio State University, promised to cut red tape to foster an environment where entrepreneurs can thrive and said he can promote a low interest rate environment to spur investment.
He worked 27 years at the World Bank, becoming country director for Indonesia in 2013. During the campaign, he came under fire over sexual harassment allegations made while he worked at the bank. He denied any wrongdoing, and attributed the accusations to misunderstandings caused by cultural differences.
Chaves served six months as Costa Rica’s finance minister under President Carlos Alvarado before stepping down in May 2020 over what he said were differences with Alvarado on spending cuts. Chaves will be sworn in as president on May 8.
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