The CAFTA Report
Arias, others outline plans to keep country solvent
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The CAFTA Report
Arias, others outline plans to keep country solvent
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Arias, others outline plans to keep solvent For The CAFTA Report
(Nov. 7, 2008) The economy was at center stage Thursday as President Óscar Arias Sánchez outlined the executive branch's commitment to lessen as much as possible negative impacts on the country. Meanwhile, his brother, Rodrigo Arias Sánchez said the main goal of the government was to prevent job loss. He also reported that he and two ministers had met with an organization representing employers and deplored what he saw as obstructionism by political opponents. The latest developments come amid tight credit, lower real estate prices and fears that recession in the United States and elsewhere will reduce the country's exports. The president spoke in El Coyol, Alajuela, at the inauguration of a second plant for Hologic, the medical manufacturer, and in the evening at the annual awards banquet of the Cámara de Comercio de Costa Rica. In both appearances Arias said his government would concentrate on the poor. Some 45 percent of next year's budget is allocated for pensions for the poorest, the Avancemos scholarship program designed to keep poorer children in school and other social spending. Arias told the business chamber that the executive branch would push for approval in the legislature of an $850 million loan from the Banco Interamericano de Desarrollo for various infrastructure projects that will give the country a competitive edge. He also lobbied for plans to complete the process of offering a concession for a contractor to run the ports of Limón and Moín. That plan is strongly opposed by dock workers on the Caribbean. "Costa Rica cannot engage in commerce with the developed world with ports that are among the worst in the developing world," said Arias. He said the government was improving the workforce with the plan to have 100 percent of the secondary school graduates in 2017 know English as a second language so they can obtain a quality job. Arias also praised a proposed citizen security initiative that would contract with private companies to keep watch on the country with cameras and facial recognition software to identify criminals via a data base. This technology will be in the hands of the Fuerza Pública, he said, citing England as an example. The government wants to invest $18 million in security surveillance, but A. M. Costa Rica reported a year ago that the British experience shows hidden cameras are no cure. Arias also promised that the government would continue to try to integrate Costa Rica with the world. He noted that a trade treaty has been negotiated and approved with Panamá and that the country is at the point of approving a similar treaty with the United States, Central America and the Dominican Republic. And it is trying to do similar with the European Union and China, he said. At the Hologic site in the Parque Coyol Free Zone Arias said that the difficult times will continue for some months but when they pass the country has to be ready. The country has to surmount this crisis with the smallest amount of loss, he said, and that only would be possible if foreign and Costa Rican companies do not lose confidence in the country's economy and its workers. When the crisis passes, the Costa Rican economy will be stronger than ever, Arias said. Arias also said that the central government was studying the best way to capitalize the state banks with the goal of meeting the credit demands of the productive sector. Rodrigo Arias was more specific. The government is about to inject some $50 million each in both the Banco de Costa Rica and Banco Nacional de Costa Rica, according to a summary of his meeting at Casa Presidencial. He met with the Unión de Costarricense de Cámaras y Asociaciones de Empresa Privada Thursday afternoon. "This is not the moment for irresponsible ideas and popularism," said the minister of the Presidencia, adding that this is not the time to engage in obstructionism as a form of political opposition. Rodrigo Arias was referring to the continued opposition to the free trade treaty with the United States, and said that this was a time to think of the country. Also attending the meeting was Guillermo Zúñiga, the minister of Hacienda, and Roberto Dobles, minister of Ambiente, Energía y Telecomunicaciones. Zúñiga told the businessmen that the recession in the United States and in Europe and the deceleration in Asia will affect the country's exports, the flow of investments and the amount of tourists. The executive branch will use its budget surplus to provide resources to the banks, said Zúñiga, who coordinates the budget. As Rodrigo Arias was meeting with businessmen, Francisco de Paula Gutiérrez, the head of the Banco Central de Costa Rica, was meeting with a legislative committee. He was generally positive about the economy. Production is high with better levels of employment and a positive financial situation, he said. The country does not have complicated financial problems outside the country, losses by the Banco Central are under control and the public debt is favorable, as is the country's international monetary reserves, he added. He was appearing before the Comisión de Control del Ingreso y Gasto Público. But de Paula also pointed out weaknesses: inflation that was 16.3 percent in October and the external debt, which is 8 percent of what the country produces each year. The world crisis can hurt Costa Rica by reducing production, tightening internal financing and causing capital to flee, he said. He said that the numbers for the international economy were less favorable than those for Costa Rica and that a contraction is predicted for the developed countries. The bright side is that a worldwide contraction would reduce the prices Costa Ricans have to pay for imported goods, including petroleum, wheat, copper, steel, among others, he said. The country imported 19 million barrels of petroleum this year, he said. Elsewhere reports on the economy are mixed. Some real estate is selling. Apartment owners are worried about tourism and possible expat renters, particularly in light of a tighter draft immigration bill being pushed by the administration. Employers point out that the semi-annual increase in the minimum wage takes effect Jan. 1 and that employees must be paid their aguinaldo or Christmas bonus in the first two weeks of December. An aguinaldo for someone who worked all year is one-twelfth of the annual salary. Some employers have said they will be able to pay the aguinaldo this year, but the real doubt is their ability to do so in December 2009. Most are looking to trim their workforce, despite what Rodrigo Arias said Thursday about protecting jobs. |
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