October 5, 2020.
IMF Out! Photo: Jeffrey Arguedas, EFE
The president of Costa Rica, Carlos Alvarado, announced this Sunday that he will not go ahead with the initial proposal to receive a loan from the International Monetary Fund for $1.75 billion dollars.
“Understanding the feeling that exists, but also the need to take viable actions, the government will not go ahead with its initial proposal with the International Monetary Fund. This in order to dialogue and balance the responses that the country needs to resolve the situation,” said Alvarado in a message to the country on a national radio and television network.
Alvarado acknowledged that there is concern among most Costa Ricans about the economic situation, unemployment and the anguish about the pandemic. He added that he shares those feelings.
In view of this situation, the President called for a great national dialogue to resolve the economic emergency facing the Central American country. The head of state pointed out that the call for dialogue comes after the protests and demonstrations against the possible agreement with the IMF.
Since the Tico government announced on September 17, the possible agreement with the IMF received an almost unanimous rejection from all sectors of the country because of the new taxes and the sale of State assets.
As a measure of pressure, opposition parties and union sectors called for demonstrations since the end of September to demand that the government desist from negotiating with the IMF. Upon announcing the decision not to continue with the meetings with the IMF, President Alvarado called for an end to the demonstrations and the blockades that have been taking place on the streets.
The Blockades have taken place in some ninety five points in the country’s highways that was highlighted this past Wednesday as a day of protests by social groups and unions in Costa Rica that reject the government’s intention to negotiate with the IMF for the $1.75 billion, to address the crisis generated by the COVID-19 pandemic, and to demand no new taxes.
Shouting “No more taxes,” the demonstrators protested in front of the Legislative Assembly, the Ministry of Finance and the Central Bank, and also blocked roads in about twenty strategic points. Former presidential candidate and former legislators José Miguel Corrales, another leader of the National Rescue Movement, encourages the blockades and accuses President Alvarado of provoking violence, by sending police and use of force at the roadblocks.
Another leader of the National Rescue Movement, Former Congressman Célimo Guido, said that “the poor have already paid a lot” and that “the fiscal gap has been filled by the mafias that do not pay taxes at all”.
Guido went on to declare, “This is a resistance movement. The president has not shown his face to negotiate and attend to the needs of the people. We are on the right side of the struggle and we demand no negotiations with the IMF and that their economic team that has been incapable and irresponsible leave now!”
.The government count was that there were more than 3,000 people who took to the streets to demonstrate.
In front of the Central Bank, trade union groups were present, claiming that it is not necessary for the government to go to the International Monetary Fund for a loan, since it considers that the money can be taken from the international reserves that total some 8 billion dollars.
While the protests were taking place, President Carlos Alvarado had traveled to the province of Puntarenas (Pacific) to hold the Governing Council there and in his speech he defended the intention to negotiate the agreement with the IMF and to increase income to solve the crisis.
“I made a commitment that was to preserve stability. It is not popular to do the right thing. Today I am jealous of countries that have fiscal space to extend benefits to companies and individuals,” said Alvarado.
The president had assured that the proposal of negotiation with the IMF “does not touch the most vulnerable people” and it does touch “the others with higher salaries and the companies”.
On September 17, the government had publicly presented a proposal for negotiation with the IMF, which included the creation of new taxes and spending cuts, in the face of a gray economic scenario that foresees a fall of at least 5% of the economy and a fiscal deficit of 9% of GDP by 2020.
The Government’s goal was to fine-tune the proposal with the parties represented in Congress and then begin to negotiate an agreement with the IMF. Opposition parties have expressed their general rejection of that proposal due to the new tax burden and because they consider the spending cut to be too small. But it was the people in the streets that was key to making Alvarado back off.
The government proposal had included the creation of the global income from 2023, the elimination of exemptions for cooperatives and other organizations, as well as an increase in the property tax from 0.25% to 0.75%. It also establishes a tax on banking transactions and an increase in income tax, both of which would apply on a temporary basis for two years.
The proposal also included the closure or merger of some public institutions, the sale of state assets such as the International Bank of Costa Rica and the National Liquor Factory; the freezing of salary increases, the elimination of tax exemptions, among others.
President Alvarado recognized that “there is discontent” in the population and high unemployment (24%), but reiterated that with the new taxes he is promoting “the wealthiest groups will pay”.
“We must be as united as possible. There is no easy way out of the pandemic or the economic crisis, but I believe that we will get through it,” said the president.
Source: TeleSUR, translation Resumen Latinoamericano, North America bureau