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$116.8 Million Bank Loan To Help Small Businesses

July 15, 2005

SMALL and medium businesses inCosta Rica received a $116.8 millionboost this week to help their survival andgrowth under the pending CentralAmerican Free-Trade Agreement withthe United States (CAFTA).The loan from the Inter-AmericanDevelopment Bank was signed Wednesdayby Finance Minister Federico Carrillo andthe bank’s regional operations manager,Miguel Martínez. It must still be approvedby the Legislative Assembly, which has yetto approve, or even begin officially discussing,CAFTA.The goal of the loan is to make smalland medium enterprises (SMEs) in CostaRica more competitive in the face ofCAFTA and forms part of the agreement’scomplementary agenda, PresidentAbel Pacheco explained at the signingceremony.“The idea is to finance sustainableeconomic growth – sustainable and fair.It is, as I have said on other occasions, agood debt, a debt for necessary things,”he said.THE funds will be divided into threeareas: improving production and opportunitiesfor small and medium businesses,increasing their use of technology and fixingrural roads.“This is not a project that was designedin a tower by some official (in Washington,D.C. or San José). This is a project whosedesign is the result of dialogue with all thesocial sectors of Costa Rica,” Martínez said.Every dollar will be accounted for toguarantee it is used for its intended purpose,Carrillo added.The Costa Rican government says itwill provide an additional $91.5 millionfor the effort.THE programs the loan will fundinclude formation of exportation consortiumsamong small businesses and guidancefor rural producers to commercializetheir products, among others.New alliances between Costa Rica’s scientificcommunity and private sector willalso be formed, according to EconomyMinister Gilberto Barrantes. This will allowfarmers and producers better access to innovationsproduced in the country’s universitiesand research centers, he said.In order for products to arrive at portsfor export, $57.6 million will be used toimprove 2,000 kilometers of rural roads.These improvements will allow moreCosta Ricans to benefit from CAFTA,Barrantes said.AS he often does, Pacheco againreminded legislators of the need to passthe Permanent Fiscal Reform Plan, whichwould overhaul the country’s tax-collectionsystem, to make the complementaryagenda work.“The country and very particularly thelegislators must be aware that we need a fair,just, efficient tax system that would allow,among other things, the collection of thenecessary resources for attention to these(loan) obligations,” the President said.The loan signed this week is for 25years, with a five-year grace period and avariable interest rate.

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