QCOSTARICA — Because the weight of public debt will exceed 60% of GDP throughout 2024, public employees would be left without a salary increase throughout next year.
The expectation is that by 2025 the fiscal rule that was approved in 2018 and that became a limitation that today affects bureaucrats can be overcome, said President Rodrigo Chaves.
Thus, 2024 will be the fifth year in a row with frozen salaries.
“I want to reduce the debt from 60% in relation to GDP, not only to improve the income of civil servants, but also to amortize the country’s debt. Our goal is to leave Costa Rica with investment grade, so that the cost of debt, not just the amount of debt in relation to GDP, is less onerous, so that we can invest more in infrastructure and not so much in interests. Now, reversing the weight of the debt below 60% of GDP is possible by 2025 and we are fighting for it,” said President Chaves in an interview with LA REPÚBLICA mid December.
By 2024, the projection is that the relationship between GDP and debt will be 60.4%.
Chaves’ words generated annoyance in the public workers union, the Asociación Nacional de Empleados Públicos y Privados (ANEP), led by Albino Vargas since 1991.
For Vargas, the fiscal rule is impoverishing the working class.
“In the case of the public sector, practically all of it will enter its fifth consecutive year of total salary freezing in 2024, which is generating a serious violation of rights, both constitutional and human, if we follow criteria already issued by the Attorney General’s Office itself,” stated Vargas.
The victims of the public labor sector, according to the unionist, include all teachers, all police forces, employees of govenrment ministries, of various autonomous and semi-autonomous institutions and of public companies.
“A real social upheaval is developing. public sector workers have jobs, but they have less and less purchasing power and the worst of all is that they will in 2024 reach a panorama of greater impoverishment and greater socio-familial precariousness,” Vargas concluded.
Give and take
Costa Rica will end 2023 in a very positive way. Year-on-year inflation will be negative, the exchange rate will show a downward trend that will benefit thousands of debtors, and unemployment will remain close to 7%.
The most notable is that the good prospects at the end of 2023 will extend throughout 2024, according to experts.
There is even a good probability that the Monetary Policy Rate (MPR) will experience a downward adjustment, which would reduce the interest paid by thousands of debtors on their loans. All this translates into more investment, confidence in the economy, generation of more employment and, of course, a reduction in poverty.
“We have had a year with negative inflation for most of the year, and although it is expected to return to positive inflation, we can say that Costa Ricans will have a very calm year in this area. Regarding the dollar exchange rate, the expectation is that it will remain stable. Most likely it will be between ¢510 and ¢560 per dollar,” said Silvia Jiménez, manager at Inversiones de Mercado de Valores.
The macroeconomic situation will favor the attraction of more foreign investment to the country. Furthermore, Costa Ricans could enjoy a 2024 without major shocks in the economy, as long as external situations do not arise that generate changes.
“It seems to me that in 2024 we Costa Ricans are going to have a fairly calm year. The truth is that we should not have any kind of inconvenience; Rather, this flourishing of new companies that are coming to Costa Rica could give us a rather benevolent year. What worries us most is security,” according to Daniel Suchar, economic analyst.
The projections
Projections for the Costa Rican economy are very positive in various areas for 2024.
The Organization for Economic Cooperation and Development (OECD), the Central Bank of Costa Rica, the Universidad Nacional (UNA), independent experts and others highlight good growth in the economy and favorable conditions.
Expected for 2024:
- Economic growth: 3.5% – 4.3%
- Dollar exchange rate: ¢510 – ¢560
- Inflation: 1.9% – 3%
- Monetary Policy Rate: 5.25% – 5.50%
- Unemployment: 9%
- Debt: 60.4% of GDP
Use this link for the list of global salaries defined by the Ministry of Planning for the public sector (figures in colones).
