Tuesday 28 September 2021

The Looming Social and Economic Decline of Costa Rica

Paying the bills

Latest

Panama will vaccinate tourists

Q24N - Non-immunized tourists visiting Panama will receive the...

End of 2021 would be the beginning of a “good” high season in tourism

QCOSTARICA - The end of 2021 would mark the...

Costa Rica 4th Latin American country best prepared to develop high-impact ventures

QCOSTARICA - Costa Rica is the fourth best ecosystem...

CCSS applied 195,598 first doses of vaccine against covid-19 during the Vaccination

QCOSTARICA - The vaccination teams of the Caja Costarricense...

Can tourists get vaccinated in Costa Rica?

QCOSTARICA - Can tourists be vaccinated in Costa Rica,...

Today’s Vehicle Restriction September 28: Plates ending in “3 & 4” CANNOT circulate

QCOSTARICA - For today, Tuesday, September 28, vehicles with...

Mexico reveals why it rejects tourists from Costa Rica

QCOSTARICA - Mexico has been one of the favorite...
Paying the bills

Share

263919_salario(QCOSTARICA BLOGS) On October 13, 2014, I wrote and submitted a blog to this site entitled, “The Costa Rica Budget, Or Will Costa Rica Be The New Greece”. As current matters unfold in Greece, with their likely default on their international debt and their subsequent ouster from the Eurozone, I can’t help but see the same parallels developing in Costa Rica.

Although the Contraloria (Comptroller General) for Costa Rica has indicated that the continued payment of Public Sector wages and pension benefits at the current levels is unsustainable, based on projected tax revenues and the Editorial in the newspaper “La Nacion”, as of yesterday drew these same parallels with Greece and its debt problems, the Government of Costa Rica has taken no affirmative action toward avoiding a similar debt crisis arising in Costa Rica. This includes the continued borrowing from international financial agencies, the funds required to support these unsustainable Public Sector wages and benefits payments.

This is exactly the same scenario that the Government of Greece followed, to put itself in the debt crisis that it now finds itself in. Foreign money borrowed by Greece from the German and French banks that are now demanding repayment, was based on a projected GDP from an Economy based on tourism and olive production.

- Advertisement -

Greeks were retiring at age fifty-five with substantial government pensions based on these borrowed funds. Greece has no domestic, or foreign investment in manufacturing of high-tech gadgets, or other exportable items such as generic pharmaceuticals, nor Multinational Company call centers, like Costa Rica does.

In short, there was no realistic way for Greece to repay the borrowed funds based on any realistic growth projection of their GDP.

The foreign investment aspect in Costa Rica is, in my opinion, the short and long-term solution to the current economic woes faced by Costa Rica. Otherwise, you are looking at an Economy based on tourism, bananas, and coffee, not dissimilar to the Economy of Greece.

However, since taking office, the current Costa Rica Government has taken steps to make such continued foreign investment unattractive from a “cost of doing business” point-of-view, with the threat of increased taxes, high employer pay-roll deductions and employee wages, and high utility costs.

Foreign investment has been leaving Costa Rica and unemployment in this sector of the Economy has been steadily rising. Clearly, the approach must be the wooing of foreign investment based on tax-breaks and lower costs of doing business, with the corresponding benefit of increased revenues from pay-roll deductions arising from increased employment. In that scenario, everybody wins, Costa Ricans have jobs and the Government has the revenue.

The U.S. Dollar/Costa Rica Colon exchange rate is hurting Costa Rica exporters and they have recently stated such. The Colon is obviously being manipulated by the Central Bank, to maintain a much higher value as against the U.S. Dollar than is realistic, as is reflected in any other World currency.

- Advertisement -

Canada, which has a much stronger Economy than does Costa Rica, has devalued its Canadian Dollar currency by almost 25% over the past year as against the U.S. Dollar, where the Colon has stayed essentially stable in its relationship with the U.S. Dollar. This cannot reflect the true state of affairs in this regard and is the root of the issue hurting Exporters.

Should matters come to pass in Greece as I have predicted with their ouster from the Eurozone, the life-style of the Greek population will be very negatively affected. Greeks will have no international credit and imported goods will be virtually non-existent.

This diminished life-style will continue for many years and the Greek population will suffer considerably for the “sins” committed by their previous governments.

I would hope that the Costa Rica Government would take note of these developments in Greece and would implement an economic strategy for Costa Rica which would avoid such similar negative developments to be the not too distant future case here.

- Advertisement -

- Advertisement -
Paying the bills
Richard Philpshttp://costaricacanadalaw.com/
Attorney Richard (Rick) Philps is a Canadian citizen, naturalized as a citizen of Costa Rica. Rick practiced law in Victoria, B.C., Canada as a member of the Law Society of British Columbia, for fourteen years, prior to moving to Costa Rica in 1998. Rick then earned his Bachelor of Laws and Licensing Degrees (Civil Law), with Honours, and a Post-Graduate Degree in Notary and Registry Law, from the Metropolitana Castro Carazo and Escuela Libre de Derecho Universities, in San Jose. Rick is a member of the Costa Rica College of Lawyers, and practices law in Costa Rica in the areas of real estate and development, corporate, commercial, contract, immigration, and banking. To contact Attorney Rick Philps about hiring him as your Costa Rican Attorney; Email: rick@costaricacanadalaw.com, Website: www.costaricacanadalaw.com

Related Articles

Panama will vaccinate tourists

Q24N - Non-immunized tourists visiting Panama will receive the COVID-19 vaccine...

End of 2021 would be the beginning of a “good” high season in tourism

QCOSTARICA - The end of 2021 would mark the beginning of...

Subscribe to our stories

To be updated with all the latest news, offers and special announcements.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.