Costa Rica: Central Bank Chief Outlines Plans For Attracting Foreign Investment

by Mike Godfrey, Tax-news.com, New York

10 April 2001

Speaking at a Costa Rican Chamber of Commerce function last week, president of Costa Rica's Central Bank, Eduardo Lizano, said that the country's economy was the key to attracting foreign investment and urged top business people to support government policies aimed at diversifying Costa Rica's economy, saying: 'The only chance a small country like Costa Rica will ever have of inserting itself into global commerce and finance is to be attractive to investment by maintaining an open economy.'

Mr Lizano said that whilst Costa Rica's economy is relatively stable, both inflation and interest rates must nevertheless be reduced to international levels. As far as inflation is concerned, it is estimated that Costa Rica's inflation rate will hit 10 per cent this year. Mr Lizano said that in view of this, government spending should be curbed, and internal debt paid off. If Costa Rica could achieve such a feat, he said, then the country will be able to entice a greater level of foreign investment. The Central Bank chief was quoted in local publication the Tico Times as saying: 'The Central Bank is satisfied with the evolution that we’ve had up to now. We have to continue to be cautious and keep our eyes open to detect anything that could create problems.'

One step in the right direction is Costa Rica's eagerness to expand its free-trade agreements. Already in place are agreements with Chile, the Dominican Republic, Mexico and Canada, but Mr Lizano and many businesses in Costa Rica are keen to conclude negotiations concerning the creation of the Free Trade Area of the Americas (FTAA) as soon as possible. Negotations are scheduled to draw to a close in 2005, but Costa Rica favours bringing the deadline forward to 2003.

Mr Lizano also seized the opportunity to rally support for reforms due to come up for debate in the country's Congress. Also geared towards attracting foreign investment, they include strengthening the private banking sector and making the country's growing financial sector more efficient.

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