‘Economic Growth Won’t Resolve it All’
What exactly does a second vice president do?
With a smile, Luis Liberman answered, “I coordinate the ministers and executive presidents in the economic field.”
That means overseeing economic decisions of government ministers and ensuring economic policy is aligned with the administration of President Laura Chinchilla, Liberman explained.
“This is a government of teams, not of individual strategies. Each one of us has our own role, but we come together on decisions that affect others, the economy, and the Costa Rican society. That’s where I fit in,” he continued.
Liberman, 63, sat down with The Tico Times at Casa Presidencial to discuss the new administration’s economic plans and share his opinions on progress and gaps in the areas of national infrastructure, the exchange rate, tourism, the fiscal deficit and foreign direct investment.
TT: What are the administration’s economic priorities?
LL: First is to return to pre-crisis levels of economic growth. That requires a lot of work because the world economy isn’t very buoyant. Secondly, we need to create more job opportunities. We went from a country with about 4.5 percent unemployment to almost 8 percent. That is not acceptable. The unemployment rate is declining but we want to accelerate the process. To do so, the first thing is to stimulate economic growth and the second is to improve competitiveness. Competitiveness comes in many different forms. Primarily, it includes improving the younger work force. We must provide the quality of education our youth need to enter the 21st century workforce. That includes more technical studies in high schools, better programs at the National Learning Institute (INA), and creating a better math and sciences curriculum in the national universities.
The next part of our plan is infrastructure. It’s well known that this country is 30 years behind in road, port and airport infrastructure. Transportation is … (pauses, smiles) in the hands of God. The previous government did a great job to improve this and we have to continue to invest significant amounts into new and improved highways, expanded airports, improving the (Caribbean) port of Moín and the (Pacific) port of Caldera. We also must understand that modern urban public transport has to change. Today’s travel is very expensive and complicated.
We have to invest around $10 billion in 10 years to be able to meet the expected demand for electricity.
We also have to determine how to advance this country digitally. Are we going to go wireless, fiber optic, or both? It’s a difficult decision to be made in the upcoming months, and will require a lot of investment.
We also must improve economic stability. We have to continue to monitor inflation and control the fiscal situation and the monetary situation. The problem or the challenge that we have is to reduce the fiscal deficit without significantly affecting economic growth. It is worth noting that the country is successfully reducing its inflation rate. Economic growth will help us resolve a part of the fiscal deficit, but it won’t be enough to resolve it all.
In regards to returning economic growth to where it was prior to the crisis, how does the administration plan to do that?
The most important thing will be public investment. One aspect is to create housing programs that will be announced in the upcoming weeks. The programs will generate a lot of activity in construction as well as for all sectors involved in making the necessary materials for construction. This will also be very important. In addition, we must continue to sell, improve and promote the arrival of foreign direct investment.
Do you think foreign investment will ever plateau and begin to decrease?
Well, in 2009, it fell some due to the crisis, but we need to continue to be proactive in bringing foreign direct investment to Costa Rica. As you have seen, we have a large number of foreign medical companies and high-tech companies coming to the country, and we hope to attract other niches, such as automotive parts, to create more opportunities and jobs. It’s interesting that many companies are buying goods and services in Costa Rica and, little by little, are also improving the local market.
So you think foreign direct investment is sustainable?
That is why we are integrating our strategies because other countries are trying to attract foreign investment. We are having success and are doing well compared to other countries, but, if we don’t take care and maintain what’s attractive about Costa Rica: Who knows? That’s why it is important to maintain quality human resources to remain attractive. If not … we will lose that level of competitiveness.
Next week: The continuation of our interview with Liberman.
Who’s VP Liberman?
Costa Rican Vice President Luis Liberman, 63, a graduate of the University of California Los Angeles with a doctorate in economics from the University of Illinois, both in the U.S., is a veteran of Costa Rica’s private and public economic spheres. In his 38-year economics and finance career, Liberman was Scotiabank Costa Rica’s general manager from 2006-2009; executive director and general manager of Banco Interfín from 1982-2006; vice minister of finance from 1977-78; and was a board member of the Costa Rican Electricity Institute (ICE), the National Power and Light Company (CNFL) and the national daily La Nación.
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