Tuesday, 29 September 2020

[OP-ED] ADOPT THE DOLLAR OR HAS IT ADOPTED COSTA RICA?

How does that little saying go? “If it looks like a duck, quacks like a duck and walks like a duck, it is probably the dollar disguised as a colon.” Can anyone recall such a dollarized economy and indeed a society so dependent on a foreign currency and yet remains in deep denial all in the name of some puritanical nationalistic pride to “Control our own economic destiny?”

I want to make sure that I understand this correctly.

Costa Rica borrows in USD, its interest rates are in USD, it must pay back the massive foreign debt in USD, it collects taxes and duties in USD, automobiles are sold in USD, hotels rooms + food + yoga are in USD, even prostitutes charge in greenbacks, homes are bought and sold in USD and even rents are calculated in USD.

So where does the colon come in except at the toll booths, grocery stores and restaurants who adjust their prices in accordance with the colon to dollar exchange rate. (Inflation is so bad that you need to order dessert with your entrée or the price might go up while you wait.)

- paying the bills -

Does our government announce the deficit, imports and exports in colons? Not at all.

By all rights, the retail price of gasoline should be going down. However, it is imported and purchased in dollars, in which case we pay more at the pumps with our hard earned colons to offset RECOPE not refining and the USD becoming so much stronger than the national currency. The government is quite pleased with all this turkey dance. After all it receives a 30% sales tax on the pump sale and a sales tax on the importation of gasoline and/or diesel.

Similar is electricity. All most all purchasing costs are in dollars while sales are in colons; adjusted of course so the increased price to the consumer which kicks out more tax money to the funny government who spends it.

Life is more expensive for both dollar earners and colon earners alike. Just when you are “pleased as punch” that your currency increased in value, everything from gas to chicken goes up in price accordingly. (I never seem to see prices come down?)

Wave the red, white and blue flag, like it or not Sir Paul McCartney is being paid in dollars, will pay his crew in dollars, tickets are sold in dollars and they will pay departure taxes also in dollars.

- paying the bills -

Will there ever be a time when the two currencies are balanced, when we know what the cost of doing business will be and that the importer will get the same shake as the exporter? A simple question, how can we or will we ever payback all of our loans? Consider that 40% of the government budget is (a) in dollars and (b) needs to get paid back somehow.

We are a de facto dollar economy and should start now to officially adopt that currency.

Juan Sebastian Campos
Juan Sebastian Campos
An expat from the U.S., educator and writer in English and Spanish since 1978 with a doctorate in business administrations (DBA) from the United States and Germany. A feature writer for ABC News, Copley Press and the Tribune Group with emphasis on Central America.

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