DEFINITION OF ‘BA1/BB+’. This is generally one of the lowest investment grade ratings that an agency assigns to a security or insurance carrier before the word “junk” comes into play.
“This rating signifies a low to moderate level of risk for investors or policyholders. Entities that are assigned this rating generally possess adequate reserves and are reasonably stable but not as solid as higher-rated securities or carriers.”
“Judged to have speculative elements and a significant credit risk.”
“Yes,” we are still investment grade but with caveats. That remains good news because either Fitch or Moody’s could have just cut our “huevos” to “junk” and justify it.
So far, and only so far, this country has been spared the “junk bond” designation and there is some faith, however small, that we have time and will rectify some, not all, of the glaring economic/social deficiencies which permeate our culture.
To even make a dent in the deficit it takes much more than looking into nooks and crannies for hidden revenues. It takes a plan, a defined plan with more than fifty cents worth of homework that can be implemented, even with limit CR resources.
The bad news is that we do not have a plan and very limited resources to administer the any tax so far having been proposed by the Solís people. The emphasis has been on collections! But the collections of what? It’s like dealing with professional scam artists: they have years to think about it and the victim has ten minutes to respond.
We all applaud no new taxes for two years. How can we not?
“Hey, foreigners have money, we want as much as possible! Let’s see, we get $15 hidden in every arriving airplane ticket that we now want to divide with tourism and with the agency of conservation.” “Woo, we can collect another 13% of taxes on anyone utilizing a typical tourist attraction such as zip-lining, snorkeling, surfing and visiting our beautiful natural parks,” and. “lets tax the condos, homes and rooms that rent out for less than 30 days, also at 13%, just like the hotels.”
Now that proposal makes no sense 1) unless the apartment, condo, home is being paid for by credit card, collecting taxes is not likely. (No Paper trail) If I live in Ohio and rent in Jaco, the terms are usually cash or Pay Pal unless that unit is managed by a real estate company. If managed by a real estate company, the use of a credit card is viable and so are taxes. So, the law says 30 days or less and I suspect that the company will just rent the property out with a 31 day contract. Even if after two weeks the renters say, “adios,” we call it a broken contract and ergo no taxes.
Not so well thought out.
On the other hand we have those, “I did not know” taxes which have to raise just a lot of revenue considering, if true, that CR has 2.2 tourists per year.
“To make sure the tourist leave broke and never come back, sock them, if we can, $29 each to leave the country and in reverse, hidden within the airplane ticket is another $15 per person to arrive in Pura Vida.” (That’s $116 + $68 (Family of four = the four of is $186. (Times the supposedly 2.2 million visitors, I certainly hope they got to see a monkey.)
If you believe that, I have this almost perfect Bailey Bridge for sale.
As rare as it might seem, the economist representing the rating agencies pretty much agree that after about four months this Solís administration is another one of those ships without direction. Not that all this floundering can be blamed on Luis Guillermo, but neither can it be faulted to former president Laura Chinchilla who tried, tried perhaps too hard to raise government revenue with new taxes but refused to cut government expenses.
However, it is the lack of direction which seems to bother Moody, S&P not to mention the IMF, as we merely bounce along the alluring waves of the Pacific and to a lesser degree the Atlantic.
And, that of the $2.5 billion loans from various institutions dedicated to public financing which through 2013 Costa Rica spent only $525 million of this called pull down loan, but much like construction and like construction companies we pay out $14 million in interest on unused funds and still have horrible, crummy roads, water, electricity and housing by any standard.
However, for once we seem to have a consensus of opinion.
There are possibly more downgrades in credit ratings which will increase interest rates both domestic and international impacting the sales of cars homes and appliances. Even food products which will continue their upward spiral as will energy and if you are lucky enough to have cash; bonds while looking like big risk, you must take into consideration those wonderful returns that each of us with less resources are paying for. They are a lot better than our local casino and Ponzzi scheme investments, unless you own a gun.