Costa Rican President Arias call for greater investment in public works

To boost funds for public works in a dry investment climate, President Oscar Arias approved a bill Wednesday that would drive more money into the country´s capital infrastructure.

If legislators agree to the proposal, government-owned banks would be allowed to increase the amount of capital invested in public works from 6 percent of their holdings to 20 percent.

According to a press release from the president´s office, private banks already contribute up to 20 percent of their capital in public works projects. This new law “would treat state banks the same as private financial entities.” However, financing from state banks would come with a lower interest rate, reducing the cost to the government.

Furthermore, if the financing is for strategic projects of the Costa Rican Electricity Institute, the Social Security System and the Costa Rican Water and Sewer Institute (AyA), t he amount invested in public works by public banks can be higher (up to 30 percent), said Minister to the President Rodrigo Arias..

The executive-led push to jump-start the economy has not been limited to capital projects. This week, the Treasury Ministry announced a 2010 budget that would increase public funding to social programs, while expanding the national deficit by 4.9 percent.

A statement from the Treasury Ministry said the proposed budget represents a commitment “to maintain social spending and public investment levels to avoid deeper effects of the crisis … and to support economic recovery, which is beginning to be observed.”