Wednesday 22 March 2023

Government withdraws IMF proposal and calls for dialogue to balance it

In a television address to the nation, President Alvarado condemned vandalism in protests and called demonstrators "in good faith" to lift roadblocks on national highways; affirmed that he will personally engage in dialogue in negotiations with ‘democratic’ sectors

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22 March 2023 - At The Banks - BCCR

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QCOSTARICA – Costa Rica President Carlos Alvarado announced on national television Sunday night that he will go ahead with the initial proposal of the government and that he will withdraw it in order to balance it.

President Carlos Alvarado on national television Sunday night

The announcement came after five days of protests across the country, criticism by legislators, trade unions and the business sector.

“I humbly welcome the call of the democratic actors of society. Heeding the call of the political parties represented in the Legislative Assembly, as well as cooperatives, unions, businessmen, the agricultural sector, solidarity, academia and religious sectors,” Alvarado said.

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Alvarado was emphatic that he will personally be involved in the dialogue.

“Today I make a call to the different sectors that support the institutional channels so that we open a national dialogue to resolve the economic emergency facing the country. In that dialogue, I will get personally involved.

“Understanding the existing sentiment, but also the need to take action, the government will not go ahead with its initial proposal. This in order to dialogue and balance the responses that the country needs to resolve the situation,” said the president.

The government’s initial proposal includes new taxes on bank transactions, property, wages, company income, and remittances, among others. Some of them temporary, some permanent, in negotiating a US$1.75 billion dollar loan with the International Monetary Fund (IMF), to bolster public financing due to the worsening fiscal crisis due to the impact of the pandemic.

The proposal also included the possible sale of the National Liquor Factory (Fanal) and the International Bank of Costa Rica (Bicsa), as well as the auction of idle properties.

The first loan for US$508 million has already been received.

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According to Alvarado, to access financing, that could last for at least three administrations, the country had to offer a strong economic adjustment.

“People in a condition of poverty or in greater vulnerability should not be affected. Furthermore, it is important to remember that the government has not proposed the sale of the ICE (Instituto Costarricense de Electricidad), the INS (Instituto Nacional de Seguros) or the public banks. Likewise, the government will redouble its efforts to reduce public spending in order to ensure a balanced proposal,” he said in his Sunday night television address.

To reduce public spending, the Government proposed the elimination of public sector annuities for the next four years, a retirement program for 7,000 civil servants, and the revision of the design of decentralized bodies to eliminate duplications.

“There are options and a proposal and there is still time to do it, but not unlimited. The worst thing would be to do nothing and just wait for a more serious crisis to hit us, like the one that occurred 40 years ago,” said the president.

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Important to note is that the Government does not intend to abandon the IMF loan, rather it proposes to seek, through dialogue with the ‘democratic’ sectors, a balanced proposal.

Violence in demonstrations

In his televised address, President Alvarado also called for the roadblocks to be lifted throughout the country.

After five days of protests, the Fueza Publica (national police) reports multiple officers injured, as well as damage to patrols and surveillance vehicles.

“With pain I have seen the outbreaks of violence and vandalism unleashed in recent days. Violence and vandalism that we categorically condemn, because none of this has to do with the ideal of peace and democracy in our country, that is not the Costa Rican way.

“The blockades that have affected people, production, and put lives at risk, must stop now. I call on those who have demonstrated in good faith to lift the blockades,” Alvarado said.

Behind the movement “Rescate Nacional” (National Rescue) is former legislators José Miguel Corrales (also a former presidentical candidate) and Célimo Guido.

Former legislator Óscar Campos is also participating in the organization of the blockades. On the weekend he announced plans to found a political party

This movement not only opposes negotiations with the IMF, but also the sale of state assets, reduction of state institutions and the cut in public spending.

Several unions, among them the National Association of Public Employees (ANEP) and the Union Association of Industrial Employees of Communications and Energy (Asdeice), made up of workers from the Costa Rican Electricity Institute (ICE),  announced their support for the movement and joined the blockades.

Joining the wave of protests are political parties such as the Frente Amplio (FA) and Partido de los Trabajadores (PT).

“The incipient economic activity, which we are trying to promote with the “Costa Rica trabaja y se cuida” (Costa Rica works and takes care) model, should not be damaged, with a view to recovering employment in all regions,” said Alvarado.

What’s next?

This Monday morning, despite the president’s message Sunday night, roadblocks continue in various areas, and organizers vowing to continue taking to the streets with no end in sight.

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