Costa Rica

Costa Rica drops two spots in 2017 Doing Business index

The 2017 World Bank Doing Business index placed Costa Rica at 62 out of 190 countries in the global ranking, two spots lower as compared to 2016 (La Nación, 25 October 2016). Some of the challenges facing the country include contract enforcement, insolvency resolution, and the protection of minority investors. The government has responded to these indicators by highlighting recent positive developments, such as Law 9392, which came into force on 4 October, that amends the Commercial Code and the Civil Procedure Code to increase transparency and the rights of stockholders on issues of corporate governance (Crhoy). The government is also working on a new bankruptcy law aimed at improving insolvency resolution (Crhoy).

 

Costa Rican Economic Council evaluates options on Bancrédito crisis

The Economic Council met on 18 October 2016 at the Presidential Office to analyze the future of the Banco Crédito Agrícola de Cartago (Bancrédito), which requires financial assistance to avoid a financial crisis (CRHoy, 19 October). The Bank has faced financial troubles since 2003, with the entity receiving millions from the government, including around US$17.5 million in 2008 as part of a capitalization made to three state banks (La Nacion). Also from 2003 to 2006, Bancrédito was administered by a newly created fund, the Fideicomiso Nacional para el Desarrollo (Finade). With the Bank again struggling financially, the options being considered are another round of capitalization, return remaining banking system resources for development finance entities, or for a state bank to assume control of Bancrédito (CRHoy).

 

ICEFI concludes Costa Rica suffering unsustainable fiscal situation

Experts from the Instituto Centroamericano de Estudios Fiscales (ICEFI) presented a report on the effectiveness of tax incentives in Central America and provided strategies on ways to improve tax collection (CB24, 20 October 2016). The ICEFI found current budget projections for Costa Rica in 2017 to be insufficient both medium and long-term and poses a risk to social achievements (CentralAmericaData). Among the issues cited, the study found spending without accurate source funding, insufficient tax collection, public spending adjusted to paying public debt, a need to institutionalize transparency and accountability, and chronic political inability to achieve comprehensive tax agreement amid a persistent fiscal deficit. The fiscal problems in Costa Rica are the result of structural shortcomings, both a lack of income and growing public spending, and requires legal changes.

 

Costa Rica leads commercial mission to South Korea

A delegation of Costa Rican government officials headed by President Luis Guillermo Solís traveled on a commercial mission to South Korea on 11 October 2016 to promote exports and services, and attract investment (El Pais). The main objectives for the mission are to strengthen existing commercial ties, open new opportunities with Korea, and to boost market diversification. Among the activities planned are follow-up meetings with Korean companies who visited Costa Rica in September 2016 during the Buyer Trade Mission (BTM) (CB24). The meetings come just before the end of free trade negotiations between Central America and South Korea, which they expect to complete this year.