Sunday 2 April 2023

Government readies economic support measures for sectors hardest hit by coronavirus in Costa Rica

"We want to promote measures that mitigate the effect that this virus will have on the national economy." Pilar Garrido, head of Mideplán.

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01 April 2023 - At The Banks - BCCR

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The Government of Carlos Alvarado is expected to present today, Saturday, March 14, a series of economic measures to counteract the negative effects that the covid-19 coronavirus is having on Costa Rican productive sectors.

The economic support measures, announced the Government, will focus on the tourism and commercial sector, which are among the hardest hit by the new coronavirus.

President Carlos Alvarado made the announcement on his Twitter account.

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Previously, Pilar Garrido, head of the Ministry of National Planning and Economic Policy (Mideplán), had confirmed to the press that the measures will be countercyclical, they seek to boost the economy and are in line with reviewing the Central Bank’s monetary policy.

The actions will be more concrete for sectors such as tourism and commerce that, so far, are among the most affected.

Garrido confirmed that the Government’s Economic Team, led by her, analyzes proposals such as the flexibility of the working day, as requested by the National Chamber of Tourism (Canatur).

“The response to this crisis must be with concrete measures that promote the hardest-hit sectors of the national economy and that is what we will announce next week,” stressed Garrido.

Both the Banco Central de Costa Rica(BCCR) and the Consejo Nacional de Supervisión del Sistema Financiero (Conassif) – Council for the Supervision of the Financial System – will participate in promoting measures.

On Monday, March 16, the Board of Directors of the Central Bank will have its monthly monetary policy meeting and where a new reduction in interest rates could be made.

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Likewise, the Superintendencia General de Entidades Financieras (Sugef) – General Superintendence of Financial Entities – will take a series of measures within the Conassif to improve the conditions of access to credit, confirmed Bernardo Alfaro, head of the Sugef.

To complement the actions from the Executive Branch, Garrido said, they will also coordinate with banks, mainly public banks, to readjust credit conditions to the most affected business sector and guarantee greater cash flow to companies.

Entrepreneurs ask for flexibility

The business sector has urged the Government, in recent days, to implement an action plan of measures, due to the negative effects caused by the coronavirus on the economy of Costa Rica.

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The proposals put forward by the sectors focused on making the payment of social security (Caja) contributions, taxes and credit operations more flexible to avoid worker layoffs or closure.

The tourism and commercial sectors were the first to react due to the economic effects of the suspension of vacationers to the country or the sanitary measures of greater restrictions in shopping centers, public shows and massive events.

“In general, we ask the Government, what is the plan to reduce costs to companies and avoid their closure?”, Highlighted a statement from the Cámara de Comercio (Chamber of Commerce), signed by Julio Castilla, president of the organization.

This Chamber also called for measures in worker-employer quotas and in the payment of taxes, just as the Canatur did.

The Cámara Costarricense de Restaurantes y Afines (Cacore) – Costa Rican Chamber of Restaurants and Related – send on Friday, March 13, a similar support in a letter to President Alvarado.

“This pandemic is generating significant economic and logistical implications in the activities of the restaurant and bar sector, a group that contributes 2% of GDP (gross domestic product) to our country and has almost 19,000 merchants (many of them small to medium-sized businesses ), with businesses throughout the country”, stressed Teresita Acosta, president of Cacore.

Regarding the relaxation of social charges, Luis Diego Calderón, Financial Manager of the Caja Costarricense de Seguro Social (CCSS), confirmed that when they receive the proposals from the productive sectors, they will be analyzed.

“In the past, the Caja has applied measures to help employers comply with the payment of their obligations to the Caja. For example, in August 2019, a series of measures came into effect that made the conditions for employers and delinquent independent workers to make payment agreements more flexible,” Calderón stressed.

The CCSS head stressed that the Board of Directors is the one that must make the final decision, prior to an analysis of the impacts on health and pension insurance.

With regard to taxes, Rodrigo Chaves, Minister of Finance, confirmed that they are analyzing possible scenarios; but did not detail measures.


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