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Costa Rica president breaks silence on Chinese bond purchase

August 29, 2008

 

Faced with mounting pressure from the press and opposition leaders, President Oscar Arias has revealed details on the sale of state bonds to China.

China is buying $150 million in bonds in 2008 and another $150 million in 2009, Arias announced Friday after keeping the information secret for months. Costa Rica has to pay back the money within 12 years at an interest rate lower than 4 percent. Arias refused to specify the rate, saying it could be between zero and 3 percent.
 
Since Costa Rica forged diplomatic ties with China in June 2007, the Arias administration has come under fire for being tightlipped about cooperation with the Eastern giant.
 
Leaders of the opposition Citizen Action Party (PAC) sent a letter to Arias first in January and again last month requesting details on the bond purchase. In February, the daily La Nación challenged Arias’ secrecy before the Constitutional Chamber of the Supreme Court (Sala IV), which has yet to rule on the case.
 
“Nothing is more public, under the Constitution, than public debt to other countries,” PAC leader and former presidential candidate Ottón Solís wrote in a letter to Arias last month. “It would be unfortunate if diplomatic ties with China started out on the wrong foot in terms of ethics and transparency.”
 
Arias said Chinese authorities at first did not want him to spill details because China gave Costa Rica a much lower interest rate than it gives to other countries.
 
The president said he asked China to purchase bonds rather than lend money in order circumvent the Legislative Assembly, which must approve conventional loans.

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