The Costa Rican tourism industry is facing an alarming crisis, according to the National Chamber of Tourism (CANATUR). As of Tuesday, the country will witness a wave of layoffs and business closures due to the dramatic fall in the exchange rate. More than half of CANATUR’s members will start cutting personnel or reducing working hours to combat the income reduction the industry will suffer as the low season starts.
The tourism industry is the lifeblood of Costa Rica’s economy, and the abrupt appreciation of the colón against the dollar has resulted in a loss of around 30% for the sector. This implies losses of ₡155 for each dollar received, and it has affected 95.8% of the tourism companies represented by the Chamber.
Shirley Calvo, CANATUR’s executive director, explained that with the arrival of the low season, businesses will aim for the reduction of fixed costs such as taxes and labor costs, staff cuts or reductions in working hours, and the reduction of supplier purchases. This means that not only the tourism sector is affected, but everyone involved, including producers, farmers, and fishermen, is also affected.
CANATUR has placed the responsibility for this crisis on the Central Bank since its monetary policy is “neither reasonable nor acceptable,” and it has focused only on fighting inflation.
The Chamber’s president, Rubén Acón, has assured that the appreciation of the colón has caused revenues to decrease dramatically, resulting in losses and placing them in an unsustainable financial position that will lead to business closures and job cuts.
Acón also stressed that the rapid appreciation of the colón is a consequence of the Central Bank’s mistaken policy, and its authorities will be responsible for closing companies and job losses, the increase in poverty, violence, delinquency, and drug trafficking.
CANATUR has asked the Legislative Assembly to exert political pressure on the Central Bank to reverse its monetary policy and to promote reforms so that the institution fights inflation and promotes employment. For a country that lives off tourism, the priority must be to keep this sector strong and competitive.
Acón assured that before Easter, the Chamber met with the Central Bank authorities to try to stabilize the price of the colon and suggested several measures such as lowering the monetary policy rate, paying the FLAR loan, and increasing the Central Bank’s dollar reserves. Nonetheless, the meeting was not successful, and the Chamber’s representatives left very upset.
The tourism industry is facing an unprecedented crisis in Costa Rica, and urgent action is required to prevent business closures and job losses. The government needs to work closely with CANATUR and the Central Bank to identify the best course of action. The country’s economic recovery depends on how quickly and effectively they can address this crisis.
