Costa Rica’s legislators approved Monday a bill that discourages the entry of speculative capital or “golondrina” (in Spanish) to the country.

The bill received in first reading the approval of 36 of the 44 legislators present at session on Monday. Opposing the bill were a number of legislators fo the Movimiento Libertatio (ML) and Partido Liberacion Nacional (PLN) parties.

[one_third]Speculative Capital. The funds earmarked by an investor for the sole purpose of speculation.[/one_third] According to ML legislator, Patricia Perez, the approval of the bill could not be at a “worst” time, discouraging the influx of dollars that is needed to control the exchange rate.

Perez added that the bill should be shelved not only because of how it will affect the exchange rate, but also the text of the bill does not define what is speculative capital.

The bill would give the Banco Central de Costa Rica (BCCR) – the Central Bank – the power to issue a declaration of imbalance in the national economy resulting from the influx of that type of capital.

More: Costa Rica Speculative Capital and Currency Controls

For the bill to become law it requires the approval of second and final reading and the signature of president.  The current legislative group ends its term on May 1. Presidenta Laura Chinchilla’s term expires on May 8.

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