No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeTopicsArts and CultureCosta Ricans Resort to Loans for Basic Necessities

Costa Ricans Resort to Loans for Basic Necessities

According to the International Center for Economic Policy for Sustainable Development (CINPE), 25% of those who request loans do so to cover basic needs such as the purchase of food, personal expenses, or the payment of services.

“Individuals resorting to debt for necessities like food or household services reflects the economic plight of a segment of the population dealing with job losses, income sources vanishing, and facing dire circumstances. These are debts incurred for day-to-day expenses, signaling economic desperation,” noted Leiner Vargas, economist, and researcher.

The survey further disclosed that in Costa Rica, 30% of individuals carry active debt. Moreover, these loans, alloted for routine expenses, signify a tremendous effort to uphold a living standard that’s no longer sustainable, potentially leading to long-term financial troubles.

“Such credit types have seen an uptick, indicating an inability to maintain current living standards, with individuals exerting extraordinary efforts, essentially spending beyond means today, risking insolvency tomorrow,” Vargas added.

Another revelation from the study is that at least 5% of the population admits to accessing “shark loans” (“gota a gota” credit), with 54% being men, primarily aged between 35 and 44 years old. Among those resorting to informal indebtedness, individuals with incomplete secondary education (30%) and those with only completed primary education (25%) are prevalent. Additionally, 75% of these individuals claimed to have never received financial education, while 33% don’t tend to budget their expenses.

Factors influencing individuals to opt for “shark loans” vary: 20% cite loss of creditworthiness due to non-payment in the formal sector, 18% were unable to access the regulated financial market, and 16% claim their payment capacity doesn’t permit further formal borrowing.

The Office of the Financial Consumer (OCF) cautioned that Costa Ricans might be grappling with informal debts nearing ₡44,000 million.

“This loan has entrenched itself in the country. Assuming a conservative estimate of loan amounts, it’s reasonable to infer that a considerable sum has been distributed through this form of credit. We should also contemplate the potential for even greater average loan sizes, along with accruing interest payments, underscoring a noteworthy phenomenon,” commented Danilo Montero, the general director of OCF.

Although Costa Rica’s economy has been praised by international organizations, many worry that those who need it the most aren’t reaping the benefits. Several deputies have questioned the government, indicating that the good macroeconomic numbers have come at the cost of reducing social investment and leaving behind those who need it most.

Trending Now

Tiger Woods Arrested on Suspicion of DUI After Rollover Crash in Florida

Golf legend Tiger Woods was arrested this afternoon on charges of driving under the influence of substances following a single-vehicle rollover crash in Martin...

Costa Rica Travel Bookings Rise as U.S. Flyers Act Before Costs Climb

Travel demand to Costa Rica is rising right now in a way that reflects more than seasonal patterns. It also shows how travelers are...

Yard House Opens First International Restaurant in Costa Rica

Yard House opened its first restaurant outside the United States in Costa Rica. The U.S. chain selected the country for its international expansion and...

Miami Open Upset as Martin Landaluce stuns Sebastian Korda

Spain’s Martin Landaluce produced the biggest surprise at the Miami Open, saving a match point and rallying past Sebastian Korda 2-6, 7-6(6), 6-4 to...

Costa Rica President Elect Laura Fernández Backs US Migration Deal

President-elect Laura Fernández defended Costa Rica’s new migration agreement with the United States on Tuesday, arguing that the deal gives the country flexibility while...

Rybakina Rallies into Miami Open Semifinals and Sets Up Blockbuster Clash

Elena Rybakina produced the headline result at the Miami Open, fighting back from a set down to beat Jessica Pegula 2-6, 6-3, 6-4 and...
Costa Rica Coffee Maker Chorreador
Costa Rica Coffee Maker Chorreador
Costa Rica Travel Insurance
Costa Rica Travel

Latest News from Costa Rica