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The report from a division of Bank of America in February described Costa Rica as a 'jaguar economy' due to its pace of production growth, the dynamism of exports linked to technology, the very low inflation with which it closed 2023 and the notable improvement in fiscal figures.
President Rodrigo Chaves announced it exultantly in one of his weekly televised press conferences when comparing his country's moment with the years of momentum of the “Asian tigers” in the second half of the 20th century.
But, for many Costa Ricans, that feline passes by from afar or is threatening them.
The macroeconomic figures used in that investment promotion report on Costa Rican bonds are true.
The Central American nation registered GDP growth of 5.1% in 2023, the highest among all members of the Organization for Economic Cooperation and Development (OECD).
It was the country with the lowest inflation (-1.8%) in Latin America.
It showed the decrease in unemployment to less than 8% and the average real salary improved.
The debt/GDP ratio fell two points to 61% and the rating agencies improved the credit rating, after the IMF approved the fulfillment of fiscal goals due to austerity measures approved during the previous Government.
“See what beauty!
The news here or the Creole analysts are not going to say this,” Chaves said in his usual scathing style, anticipating numerous objections that have been raised by the local press, academia, independent specialists, unions, opposition parties and even the Catholic Church.
The good macroeconomic numbers conceal the conditions in which large groups of the population live and the growth of the gap compared to the most advantaged sectors.
Rodrigo Chaves in Washington (USA), in August 2023. SHAWN THEW / POOL (EFE)
Costa Rica is the OECD country with the worst income inequality, according to data for 2022, with no signs of improvement in 2023, as the decline in social investment recorded in the last decade continued.
Between 2014 and 2024, social investment went from 50% of the Central Government budget in 2014 to 38%, according to reports from the Comptroller's Office of the Republic.
In 2022, 28% of scholarships for poor students were cut.
Costa Rica is the nation with the highest percentage of poverty among OECD nations, stagnating at more than 20% during this century regardless of how much GDP grows or who governs.
It is fertile ground for drug trafficking organizations, whose fights pushed the country to its worst homicide record in history, although so far without affecting the recovery of the tourism industry after the pandemic or the arrival of investments, which rather flood of dollars the economy and have led to the lowest exchange rate in 10 years.
The Government has reported that there is now fiscal solvency and that the revaluation of the colon is a “sign of success”, but when it comes to allocating money to education, scholarships, health or social housing, the reality is different.
It is not enough, said the Minister of Finance, Nogui Acosta, awarded as the best finance minister in 2023 by The
Banker
magazine .
“The Ministry of Finance will make all the necessary efforts to carry out this transfer of resources, as long as the macroeconomic, fiscal and budgetary conditions allow it,” he responded when deputies questioned him about how to reverse the reduction of 110,000 scholarships for poor students. registered in 2022. He thus recognized that the priority of the moment is the financial indicators and not the recovery of the welfare system that for decades placed Costa Rica in a place of international admiration.
“Where are we going to take them (the resources)?” Acosta asked himself to answer questions from the press, after hearing a majority of deputies reproach the Government's priorities.
“There are two Costa Ricans, one of the macroeconomics, and another of those who try to survive,” a liberal legislator told him.
“Tax figures are put before people's quality of life,” criticized a right-wing parliamentarian.
“We are experiencing very expensive savings, because it perpetuates poverty,” lamented a legislator from the social democratic wing.
“The 'jaguar economy' is what eats up scholarships and social investment,” added a left-wing legislator.
Dress saints without undressing others
The dilemma consists of dressing saints without undressing others, the figure used to explain the dilemma by the economist and consultant Alberto Franco, former director of the Central Bank of Costa Rica, former director for Costa Rica before the Inter-American Development Bank (IDB) and representative of the Government current in its first six months before the Central American Bank for Economic Integration (CABEI).
"We must open ourselves to the possibility of reviewing each expense or uncovering some of the indicators, but we cannot fail to cover the priority in key areas, such as education, health and security or poverty."
Franco explains that it should not only be addressed for social justice or because it has traditionally been a hallmark of the Costa Rican system, but also because in the medium term, this investment will also give a measurable return in macroeconomic terms.
“Leaving thousands of children without access to education today will make us pay a very expensive bill in a short time,” says Franco, warning that international organizations also expect a balance between financial stability and social peace from Costa Rica.
Police search a young man at a checkpoint, in a nightlife area of San José, in January 2023. Carlos González (AP)
For this reason, Franco finds Nogui Acosta's message understandable about the need to now prioritize fiscal stability and macroeconomic indicators to “create space” to increase social investment, but he admits that there may be risks.
"I applaud the country's efforts to organize finances since 2018, but management at this time must be fine so as not to affect those essential areas that give us social profitability."
Other analysts and opposition deputies suspect that the containment of spending in 2024 may be due to an intention to increase it in 2025 to improve the image before the February 2026 elections, although the law prevents Chaves from immediate re-election.
For the moment, Chaves celebrates it and insists every week in his press conference: “Costa Ricans, we are doing well,” but he does not always go into the details of the data, and on some occasions he dilutes the truth.
For example, it praises the lowest unemployment rate in 14 years, but avoids saying that this is not due to the massive creation of jobs, but is related to the departure of more than 100,000 people from the labor market in the last year, especially women, young people and people with a lower educational level, for various reasons that constitute a “yellow alert,” according to an analysis by the Central Bank in January.
Only a part of the population benefits from the dynamism of exports of goods such as medical devices and other products manufactured under a special regime that grew above 10% in 2023, three times more than traditional companies, although it contributes one seventh of GDP and less than an eighth of jobs.
It is the continuity of the “two faces of Costa Rica” that different reports have pointed out over the last two decades, a period in which the country has increased inequality, in the opposite direction to the average trend in Latin America.
The post-pandemic economic recovery has also widened the gap.
There are also adverse conditions hidden in the inflation figure.
It is true that it closed in 2023 with a negative figure, but it is not enough to compensate for the increases in 2021 and 2022, which means that families now continue to pay higher prices than three years ago, said Alberto Franco, who reiterates the need to strengthen basic assistance programs for households in poverty or close to falling into it.
This is what the bishops of the Catholic Church also asked for in a harsh message at the end of February: “Our model of socioeconomic organization has proven to be structurally incapable of reducing poverty in a significant way.
There are no measures to alleviate poverty.
The country's social investment has been collapsing rapidly,” the prelates criticized in the declaration, before launching among their recommendations the need to resume dialogue between sectors and between powers.
Economist Franco and the 2023 report from the State of the Nation research center agree with them: the relevance of the Executive and Legislature to lower tension and make decisions that allow solving the needs of the population through political methods that are part of the “country brand”.
These agreements are those requested by Michael Jiménez, 39, who feeds his family with the little he earns as a food delivery man through digital platforms.
He does not have social security, he does not contribute to a pension and his eldest son left school to look for a job, but has not yet found a job.
At his house they never eat more than two meals.
“I was a mechanic, but the boss closed the workshop during the pandemic and I was left on the street.
I was able to buy a motorcycle on credit to work on this, but for many it is very hard.
In politics one only sees disputes between the Government and the deputies and thus nothing is achieved.
"I don't know who is right, but I do know who suffers from it, those of us who are at the bottom."