In announcing a series of extraordinary actions to save the country from the economic pandemic, the President of the Republic, Carlos Alvarado, assured that the crisis has not ended and will not end in months, calling for “acting together, because they are in the balance many lives, health and the economy ”.
“This is a resistance fight that demands a lot of responsibility, a constructive attitude and patriotism,” said the president this Sunday in a message to the country, in which he reiterated the call to the population not to lower their guard or to neglect themselves in front of COVID- 19.
“Just as in health, we have taken the extraordinary measures required and in the social sector, serving the population with actions such as the distribution of newspapers to homes or the Protect voucher, in economic matters it is also our responsibility to take extraordinary measures, with the absolute certainty that This is a brave country and once again we will succeed, “he said.
In this regard, he recalled that the International Monetary Fund (IMF) projects that the average decline in the economy in Latin America will be 9.4%, and that although for Costa Rica it will be less than that regional average, “the coup It will be very hard. “
As in the entire planet, economic production will contract, affecting employment and the State will have lower income to meet its responsibilities. It is estimated that in Costa Rica tax revenues will decrease by almost 1.2 billion, that is, 3.3 percent of the Gross Domestic Product (GDP), which represents very difficult times.
After assuring that to guarantee economic stability the country must take strong and courageous measures, the President of the Republic listed the following actions:
Historical contraction of public spending. The Minister of Finance will present proposals to the Legislative Assembly this Monday that will reduce public spending by around ¢ 355 billion, which is equivalent to 1% of the size of the entire national economy.
“It will be the largest cut in public spending in our history,” said the president, explaining that this action will lower pressure on the country’s debt. He clarified that it will be cut in all matters, but without touching social programs and preserving large investments.
Alvarado respectfully asked the ladies and gentlemen for the study and prompt approval of those proposals to reduce spending, including the extraordinary budget.
Management with multilateral organizations. In the route of guaranteeing the economic stability of the country and meeting the obligations that Costa Rica has, the Government has also managed “full support” from multilateral organizations, achieving very favorable conditions to refinance the debt that the country already has.
Alvarado reiterated that these international credits are NOT new debt. “They are a way to remove expensive debt for cheaper debt for Costa Rica. It is similar to what a person does when they reset their debts, to have better interest rates or better payment terms, “he emphasized in his message to the country.
“This economic route resolves the financing of the State and stability for the year 2020. For this reason, I request that Congress, with the patriotism that has characterized it, approve international credits to finance the country,” he said.
Negotiation with the IMF. With the indicated reduction in spending and with the refinancing of the debt, stability would be guaranteed for the year 2020. “But how do we resolve the situation for the year 2021 and years ahead?” Asked Alvarado.
Often he affirmed that once a special loan for $ 504 million with the IMF is approved, the negotiation with that body will be opened to have a financial agreement, known as “Stand-By Arrangement” (SBA), essential to maintain the economic stability of the country in the coming years.
Alvarado announced that key political actors such as deputies and different political leaders will participate in the discussion process, for which he will dialogue with heads of factions, reiterating their commitment to Congress on May 4, not to take actions that harm the poorest people.
“The agreement should be a balance between 4 objectives: preserve the stability of the economy and public finances, generate greater efficiency in the public sphere, maintain our Social Rule of Law and have the least impact on the population,” he said, indicating the delicate balance of all the parts it takes to leave no one behind in the face of the crisis.
“We will seek to avoid new taxes or greater burdens as much as possible, especially for the most humble people. And if the situation caused by the pandemic forces us to move in that direction, it would be done by distributing burdens among the groups that have the greatest wealth, from a solidary vision, and trying, at the same time, not to affect the productive apparatus, “he stressed.
Stimulus to national production. The president announced that at the end of this semester -thanks to the hard work that ICE is doing- there should be a relief in the different rates of that institution.
“In terms of efficiency, it is critical to approve the reform of public employment, make administrative contracting faster and more transparent, and continue to undermine the belt as much as possible without affecting development,” he said.
In addition, he assured that the Government will continue executing the ambitious infrastructure plan on roads, bridges, schools, aqueducts and hospitals, which generates well-being, employment and greater competitiveness. Product