COSTA RICA OP-ED – Bottom line is that I have an opinion that Costa Rica is on the road to deep, a very deep international financial crisis unless we modify the constitution, the thousands of mundane, often repetitive regulations and those laws that are next to impossible to comprehend.
Most importantly, we have adopted the first-world and keep on financing our lifestyles much like that world; therefore penalizing, obligating the youth and those who live here under the age of forty to “pay back”.
In the most simplistic terms; we cannot keep on going absent of direction and unscathed by history. It will not take long for the credit world to reduce our standing to “junk” and that might be the best of all scenarios. (The warnings have been published) The worst case would be to become another Argentina, Ecuador, Jamaica, Ukraine or Detroit, Michigan and default on payments which now total or are close to 47% of the annual budget.
To cover government costs in 2015 it is predicted to pay 53% with tax revenue but 47% of that cost is by issuing even more bonds. That translates to larger payments on interest and 39% of gross income than what Costa Rica paid out in interest in the year 2013.
In human terms, inflation is running at an estimated 5.4% and not the predicted 3% – 5% as predicted. Most economists are predicting a 2014 year end inflation rate between 6% and 6.5%.
Solís alone is not the culprit.
Costa Rica designed and implemented a system of built in payments to bureaucracies, government employees and institutions that are embedded into the constitution and etched in bronze. I argue, the “holy” constitution is antiquated and is being abused by those who can gain the most from it and those who are convicted of crime but walk free based on any of the hundreds of technicalities that the document offers.
We are too liberal in holding feet to the fire, so to speak.
As a start; we need two term presidents, a limited term congress who are voted in by “direct” vote for no more than two terms and we need to cut, with a sharp scalpel, many of the redundant, mundane and useless laws and regulations that run Costa Rica.
Through the bureaucracy we have created the monster of Dr. Frankenstein. It is the bureaucrat and his/her hobbit which laughs in the face of “change.”
For example, it is by constitutional law that public universities receive 14% of GDP increases in budgets each year and government employees receive a 4% increase in salary + multi-benefits and perks such as a one month vacation.
This is archaic socialism that historically has not worked.
The mix of neo-liberalism and liberalism has always fostered social/political economic conflict. While wanting to do “good” for the masses, especially the poor, will sometimes result in extreme economic measures such as in Venezuela that ultimately harm the general population. Costa Rica has historically been able to balance both sides. However, now economics begs the question if this mixed salad can survive much longer.
Economically, we are similar to countries such as Argentina, Ecuador, Venezuela, Cuba, Cyprus, Jamaica, which each government is rated as “junk bonds quality. Translation; the interest rate on all loans, government or private, will increase by 15% to 20% annually. Something this country can never, ever afford.
The national question to the president is “how?” We are what we are and how do you plan to increase investments, reduce the costs of living, clean up corruption and provide 217,000 more jobs?
Where are we and where will we be?
Photo: http://www.sanramon-costarica.com/
I concur in your assessment of the legal and financial quagmire Costa Rica is in. My political orientation is liberal, but the system of dysfunction in this country isn’t liberal – it is insane. The laws regarding public employees seem to be the worst – vacations plus numerous paid days off at Christmas and Easter. Of course, everyone gets aguinaldos and semi-annual raises, which cost the government and private employers and drive up inflation. Laws that allow landlords to raise rent by as much as 15% per year, unilaterally changing lease agreements, are absurd and also drive up inflation and result in abuse of tenants by landlords. No-strings-attached gifts to the Catholic church by the government when the government is swimming in red ink – insane. Expensive contracts for services and no oversight to ensure that adequate services are rendered – insane.
Perhaps the greatest example of waste is a Caja system that pays employees to keep patients/customers running in circles. Get a referral to a specialist? Take it to the hospital and drop it off during specified hours, go back during other specified hours to pick up a slip to take to the specialist’s receptionist, go back on a different day during other specified hours to pick up your appointment, then go back on the day of your appointment to see the specialist, if the specialist goes in that day and you don’t have to reschedule – all these trips to the hospital to accomplish what should be possible in one trip or a fax or phone call to get an appointment, then a trip to see the specialist. This is not only a major inconvenience to the patients but also requires a lot of employee time. Need special diagnostic studies or surgery? Go to the hospital when told to report, then stay in hospital, sometimes for weeks, until they get around to scheduling the procedure – all while other patients wait to be admitted because there is no bed space. Private hospitals and clinics would go broke if they operated this way. When I had major surgery at a highly rated private hospital here, I went in on the morning of the day of surgery and was discharged a few days later.
Laws need to be changed, but the new laws should be crafted by someone who knows how to write law. It seems that every law that passes here is logically or constitutionally defective.
The recent ratings such as the one reporting that Costa Rica is the worst country in the region for business should be taken with a grain of salt because they are based in part on dissatisfaction expressed by people here, and Ticos are famous complainers. There is good reason for this – here complaining and demonstrations often result in concessions by the other side, whereas that is not the case in countries with more oppressive governments. In this case, complaining is hurting Costa Rica’s international reputation. Complainers would do better by supporting President Solis in its efforts to stop this country’s wasteful ways. I expect the PLN to do everything it can to obstruct his efforts, and the president will need the support of the people..