• Tico Travel Surfing
  • Costa Rica Coffee Guide
  • Squaremouth travel insurance button 468x106
  • Costa Rica Real Estate

Eurasia Group downgrades Costa Rica’s short, long-term outlooks to ‘negative’

January 17, 2015

The Eurasia Group didn’t even wait for lawmakers to get back from their holiday break next Monday before announcing a downgrade of Costa Rica’s short and long-term outlooks to “negative” from “neutral.”

Eurasia Group senior analyst Risa Grais-Targow cited growing challenges for President Luis Guillermo Solís’ Citizen Action Party (PAC) and a lack of perceived political will to rein in the country’s fiscal deficit among the drivers behind Friday’s downgrade.

A “negative” outlook from the risk analyst group means they believe politics will negatively affect the country’s wider business environment.

Grais-Targow characterized Solís’ decision to lift former President Laura Chinchilla’s (2010-2014) veto of a long-stalled Labor Reform Bill as a political blunder that would cost him support from the center-right Social Christian Unity Party, which they claim is necessary to hold on to the legislative presidency. Already lacking a majority in the Legislative Assembly, PAC’s chances of passing proposed fiscal reforms would fizzle, Eurasia Group predicted.

The Solís administration is pushing two fiscal bills for the 2015 session, including a transition to a value-added tax structure from the current sales tax system, and a global income tax that would place Costa Rica alongside the United States among a handful of countries that tax citizens on foreign-earned income.

The downgrade was further pushed by the legislature’s decision to pass Solís’ proposed budget without any cuts after the Legislative Assembly struggled to come to an agreement on what to trim from the $14 billion budget — the largest ever approved by Costa Rican lawmakers. The country’s deficit is set to grow by 6.7 percent of gross domestic product, exacerbating concerns that Costa Rica will have to continue financing the government with more debt and no exit strategy.

In September 2014, Moody’s Investor Services downgraded Costa Rica’s sovereign debt to junk – Ba1 – with a stable outlook.

You may be interested

Costa Rica confirms 21 new coronavirus cases
Costa Rica
8845 views
Costa Rica
8845 views

Costa Rica confirms 21 new coronavirus cases

Alejandro Zúñiga - April 2, 2020

Costa Rica has confirmed 396 cases of the novel coronavirus, the Health Ministry announced Thursday afternoon. The figure marks a…

News briefs: Banks warn against COVID-19-related scams
Costa Rica
1383 views
Costa Rica
1383 views

News briefs: Banks warn against COVID-19-related scams

Alejandro Zúñiga - April 2, 2020

The coronavirus pandemic has impacted daily life in Costa Rica, which has declared a State of Emergency and enacted sweeping…

Costa Rica enacting strict measures during Semana Santa; country adds 28 new coronavirus cases
Costa Rica
8845 views
Costa Rica
8845 views

Costa Rica enacting strict measures during Semana Santa; country adds 28 new coronavirus cases

Alejandro Zúñiga - April 1, 2020

Costa Rica is enacting a series of measures to slow the spread of COVID-19 during Semana Santa (Easter Holy Week).…

Do NOT follow this link or you will be banned from the site!